AP Photo/Steven Senne
- Rose Capital, a marijuana-focused firm founded by former Wall Street veterans, closed its first $55 million fund, bringing its capital under management to $100 million.
- The fund avoids investing in plant-touching companies, Timothy Simon, the firm's head of capital markets, told Business Insider in an interview.
- Rose Capital joins a number of cannabis-focused funds in the New York City area as legalization sweeps the US.
The cannabis industry is seeing a wave of dedicated funds hoping to capitalize on the green rush.
Rose Capital on Thursday closed its first $55 million fund, bringing the firm's assets under management to approximately $100 million, said Timothy Simon, the firm's head of capital markets.
Based in Greenwich, Connecticut, the firm was founded by Sat Joshi, a veteran of Apollo Global Management and hedge funds Ziff Brothers and Incline Global Management, and Andrew Schweibold. Schweibold also spent time at Apollo, as well as hedge fund Vision Capital and private equity shop Delos Capital, according to LinkedIn.
The firm's fund I is fully deployed across a range of cannabis startups, including Mary's Medicinals, a CBD (cannabidiol) oil company, Helix Biotrack, a software provider, and Eaze, a cannabis delivery service, among others.
The fund focuses on three verticals within the cannabis industry: consumer packaged goods, data and analytics, and distribution. Their investments are spread equally across the three verticals, Simon said.
The firm avoids investing directly in "plant-touching" companies - those that cultivate or sell marijuana directly - because of the "pricing erosion" due to the commoditization of wholesale cannabis, said Simon.
"The industry has existed for hundreds of years, but has previously been supplied and managed by illicit markets," Simon said.
Simons declined to disclose the investors in the fund. Investors in cannabis-specific funds, however, are generally either high net worth individuals or family offices who are able to take risks that institutions can't.
Rose Capital joins a bumper crop of cannabis-focused investment funds led by former Wall Street veterans in the New York City area.
Merida Capital, founded by Mitch Baruchowitz, a former corporate lawyer, mostly invests in later-stage cannabis companies with a focus on ag-tech and data analytics.
And Altitude Investment Management, another New York-based fund, on Wednesday closed its first $30 million fund.
The firm is planning on raising another fund in the first quarter of 2019, which partner Jon Trauben - a former managing director at Barclays and Credit Suisse - told Business Insider will be "north of $100 million."
- Read more:
- A top cannabis private equity fund manager reveals how he picks companies to invest in
- The top 12 venture-capital firms making deals in the booming cannabis industry that's set to skyrocket to $75 billion
- Big asset managers like BlackRock are sitting on the sidelines of the $75 billion US marijuana industry because of one big pain point