MJBulls 0016 Mazakali Transcript

Dan Humiston: [00:00:00] Today's show and the following message are brought to you by aGriscience labs the largest most established cannabis testing network in Colorado. To find out how you can get the most accurate and reliable test results visit AgriSciences dot com.


Sumit Mehta: [00:00:16] Companies and those phrases are typically growing extremely quickly and raising meaningful capital can be a full time job as a company that is growing very quickly. So in in those instances it is a better use of the management time to focus on building the business and let folks that are professionals at raising capital do exactly that.


Dan Humiston: [00:00:38] From Buminit media. its the MJBulls podcast a show about raising Cannabis Capital


Dan Humiston: [00:00:47] I'm Dan Humiston and on today's show. Part 5 in our series things to know when raising cannabis capital to Sumit Mehta and Brett Johnson from mazakali advisers join us to talk from investment bankers perspective


Dan Humiston: [00:01:05] Today we're continuing our series on things to know in raising cannabis capital and to help us with that we have Sumit Mehta and Brett Johnson from Mazakali to share their insights from an investment bankers perspective summit and Brent. Thanks for being on the MJ bulls. podcast. You know this is going to sound like a really dumb question to start off. What exactly do investment bankers do.


Sumit Mehta: [00:01:33] Very simply but we help companies raise capital and we help investors place capital.


Dan Humiston: [00:01:39] What stage should a company that's considering raising capital hire an investment banker.


Sumit Mehta: [00:01:43] When companies have some traction they have position in the marketplace and they're looking for capital to expand typically between the bridge and series rounds is when they would start looking for outside assistance where those capital raisings.


Dan Humiston: [00:02:03] Define Birdge round.


Sumit Mehta: [00:02:03] Sure it's around that typically between serious round 2 and angel funding round and a couple that is looking to bridge their capital needs until they get to that series they raise are the companies that we're describing. So I mean that's an example of a company we typically work with as one that's raising more than 5 million ways and intended dilution of no more than 25 percent.


Sumit Mehta: [00:02:32] So that's about the time that they should bring on and professional people that do this for a living to help them with this process and one of the reasons.


Dan Humiston: [00:02:39] I'm just jumping ahead here but one of the reasons I'm assuming is because we get into some pretty sophisticated stuff as you move up the ladder as you said that's correct.


Sumit Mehta: [00:02:48] There's also another reason which is that the companies in those phases are typically growing extremely quickly and raising meaningful capital can be a full time job as is a company that is growing very quickly. So in those instances it is a better use of the management time to focus on building the business and let folks that are professionals at raising capital do exactly that.


Dan Humiston: [00:03:14] What are some of the things that you require them to do to get ready for the capital raise or the next raise.


Sumit Mehta: [00:03:19] But as a host of services we'd provide our clients that would fall under the investment banking umbrella. Certainly capital  capital planning and deal structuring are a very important part of what we do but also building models and building products and understanding valuation and understanding the split on how best to raise equity when best to raise equity. How much debt to add onto the balance sheet and how to position the company out of the marketplace. I would all fall onto that list of things that we do with our clients to a lot of those things that normally would fall into the clients place.


Dan Humiston: [00:03:52] You guys will take care of you like a pitch deck. I know that could be just putting together a pitch deck it's very very time consuming and that's why working with an investment banking firm like mazakali is very helpful and takes that pressure away is that correct.


Sumit Mehta: [00:04:06] Certainly we come from finance backgrounds and collectively we've spent over 100 years on Wall Street and we understand and speak that language. We also have spent a lot of time in the cannabis space and have been investors and participants in it for four years as well. So understanding those communities understanding how to bridge what companies are trying to express with what investors understand is crucial in getting those conversations maturing to the point of investment.


Dan Humiston: [00:04:31] You brought up a point that its important to be familiar with the cannabis industry. I suspect it's pretty important to make sure that you're working with one that has at least some experience in cannabis Can you expand on that.


Sumit Mehta: [00:04:42] cannabis is an emerging market and as such it exhibits many of the qualities of the emerging markets  such as fragmentation  and certainly a large level of opacity of information. And when you have all of the frictions placed on top of that with advertising and such you have a marketplace that is rife for misinformation. You also have a market place because of fragmentation that has at least 12000 licensed businesses and perhaps 20000 unlicensed businesses when you have an industry that's growing at 27 percent and and doubles in size every 30 two months. And so we're looking at 32000 businesses that are all growing at a very fast . We're also looking at 32000 investment opportunities and it is crucially important for folks to understand the industry understand the moving parts and understand where the best use of capital is in order to do service to the investors who are ultimately providing the fuel that's going to build us plain.


Dan Humiston: [00:05:43] Just a quick thank you to one of our sponsors Bridge West LLC is one of the first accounting firms in the world to focus solely on the cannabis industry. It is your one stop provider for accounting audit tax and advisory service. They're offering a free 30 minute intro call to one of their leadership teams to all MJ bulls listeners go to bridge west CPA .com and now back to the show.


Dan Humiston: [00:06:07] So after a deal is closed. Is there a role at her post closing for an investment banker actually gone.


Brent Johnson: [00:06:14] Often these companies are raising money for corporations and so we stay in close contact with the company. They typically have additional capital needs which we assist with and soon we successfully raise money for a company like engages for  serve a long term relationship.


Dan Humiston: [00:06:31] Other words once a lot of times once they start down the track of raising capital. It's not a once one and done deal. Usually there are second third fourth rounds that need assistance.


Brent Johnson: [00:06:41] Yeah I guess just depends on how much from other runners but typically there are like units that are there that are fundraises friends and family angel money seed money but it's not unusual for a company to do as a series before either you get acquired or take the company public


Dan Humiston: [00:07:05] To before we wrap. Can you tell us a little bit more about mazakali and how our listeners can get in touch with you if they have any questions.


Sumit Mehta: [00:07:11] Sure. Our Web site is certainly the best place to learn about our company mazakali.com and it is a cannabis investment banking form. We publish research under the term green papers. Those are all also available on our website. Our intent is certainly to help listeners get educated and get advice and ultimately get invested.


Dan Humiston: [00:07:31] Your email addresses  sumit@mazakali.com. all this information will be on the MJ bulls website and if anybody has any questions I am sure some it will be happy to get back to you. Smith and Bret thanks so much for demystifying the world of investment banking for our listeners.


Sumit Mehta: [00:07:47]  Dan thanks and for all you do for the industry.


Dan Humiston: [00:07:50] Thank you. Good luck.


Dan Humiston: [00:07:55] Just a quick thank you to one of our sponsors Trevett Hill managing and supporting a cannabis investment is both time consuming and expensive Trevett hill help provides cannabis investors with an external team to help their investment reignite growth. To learn more go to Trevett Hill .com


Dan Humiston: [00:08:14] Thanks for listening to the mjbulls podcast to learn more about today's guest or to apply to be a guest. Visit our Web site at M.Jbulls.com if you like our show. Give us a review on iTunes. Today's show was produced by buminit media. I'm Dan Humiston and you've been listening to the mjbulls podcasts.