By Emily Ledger
With multinational companies entering the UK cannabis sector, retail investors flocking to crowdfunding sites, and the London Stock Exchange now open to cannabis start-ups, the UK is now Europe’s fastest-growing hub for cannabis investment, according to a recent analysis.
Hanway Associates, Europe’s leading cannabis consultancy firm, have analysed the European cannabis investment ecosystem using new data from Crunchbase and Seedrs. This analysis revealed that private and public cannabis investment in Europe now totals over €1.2 billion, with more than 20% of that total raised in the first half of 2021.
The recent report, titled The European Cannabis Investment Ecosystem (ECIE), was produced by Hanway Associates in partnership with global law firm DLA Piper, Swedish cannabis fund Enexis, and London-based investment bank Hannam & Partners. Its findings reveal that Europe’s cannabis sector is “thriving, innovative and profitable – and primed for explosive growth”.
The ECIE examines the scope and scale of major, EU-wide investments by venture capitalists and retail investors and identifies major corporate and institutional investors that are beginning to enter the sector.
Further, the data reveals that an estimated €120 million has been invested privately in European cannabis companies in the first six months of 2021 alone. If investment continues at this pace, it is estimated that fundraising could exceed a record-breaking €350 million by the end of the year.
Venture capital investment is beginning to represent the majority of investment in the sector, representing a reported 42.1% of capital invested privately in the European cannabis ecosystem. This includes venture capital from Innocent Drink’s founder Richard Reed’s fund, Jam Jar Investments, as well as from Brewdog’s founder Martin Dickie.
More venture capitalist funds are also actively watching the space. In a recent press release, Will Gibbs, Principal at London-based VC Octopus Ventures, stated that they are keeping an eye on the sector and that they “have built a strong thesis and track record around taboo sectors. Only a subset of investors and entrepreneurs go into these spaces, but the size of the prize is massive.”
Cannabis start-ups meeting investor demand
In the first half of 2021, Europe has seen a 50% increase in the number of cannabis-related IPOs in comparison to 2020. As of June, the total raised on European public markets has also increased by more than 116.2% since last year.
The number of crowdfunding campaigns related to the cannabis sector has also been on the rise, with platform Seedrs opening its doors to cannabis businesses this year. According to Seedrs, 100% of the cannabis crowdfunding campaigns on its platform have been successful, with companies raising over €6.32 million in 2021 to date. On average, the data shows that 510 retail investors invested in each cannabis deal through the Seedrs platform.
Jeff Kelisky, CEO of Seedrs, said: Companies like Aphagreen, Grow and Voyager are just some of the cannabis businesses who are running crowdfunding campaigns to raise the much
needed finance and we’re looking forward to supporting even more cannabis-based businesses in the future.”
“Globally, there is a growing acceptance and recognition of CBD and medicinal cannabis for its enormous therapeutic benefits.
“This openness is now translating into enormous amounts of interest – and capital – from retail investors. This is a market with huge potential, and now, for the first time at scale, retail investors can share in its growth early on.”
London – Europe’s cannabis investment hub?
A reported €53 million of investment has been raised on London’s stock exchanges in the first six months of 2021, with London’s AIM exchange being the home to the earliest European cannabis IPO with GW Pharmaceuticals in 2001. GW Pharmaceuticals was acquired for $7.6 billion in 2021, setting the benchmark for mainstream acquisitions in the European cannabis sector.
Furthermore, the David Beckham-backed company, Cellular Goods, saw their stock value surge 470% on their London Stock Exchange debut, bringing the company’s market capitalisation to over $100 million.
In a press release statement, Marcus Stuttard, Head of UK Primary Markets and AIM, at London Stock Exchange plc said: “A growing number of cannabis-related companies are choosing London Stock Exchange to continue their growth journey and we expect this pipeline to remain active.”