High risk, high rewards

October 12, 2017 Features

This past summer, a venture fund managed by Rollins’ Entrepreneur-in-Residence Allen Kupetz invested $125,000 in Mountjoy Sparkling, a cannabis-infused beverage company one of his students is involved with. Luke Horan ’21 is the Search Engine Optimization (SEO) analyst and manager of Social Media and Design for Mountjoy Sparkling, a Northern California-based cannabis infused sparkling water company that promises to “take the edge off without the hangover.”

The sparkling water features the full spectrum of cannabis’ psychoactive compounds, including THC. Luke first got involved in Mountjoy Sparkling when family friend Alex Mountjoy visited his father, seeking a co-founder for the company. According to Horan, “My dad called me to see what I thought about it. I said go all in and I started talking to the CEO and he offered me a position with the company.”

Later, Horan was taking Kupetz’s Global Entrepreneurship Maymester class, which had an assignment to pitch a start-up company. Seeing a valuable opportunity, Horan met with Kupetz to ask if he could pitch Mountjoy in class.

Kupetz gained an interest in Mountjoy and flew out to California to meet the founder.  Three weeks after the pitch, Kupetz raised a new fund, the Anauj Investment Group, and invested $125,000.

Anauj is a venture fund that makes early-stage investments in the growing cannabis sector. The fund derives its name from reversing the last five letters of “marijuana.”

According to Kupetz, “Anauj’s average first investment is $100k and if the business does well, Anauj will continue to invest to fund the company’s growth.”

Kupetz and his investors do not plan to stop at Mountjoy. They also recently invested $75,000 in Defonce Chocolate, another California cannabis-infused business. Additionally, Anauj “expects to have invested over $1 million in 5-6 companies within 24 months,” according to Kupetz.

Kupetz and Anauj’s investors understand the high-risk, high-reward nature of investing in a product which remains federally prohibited.

“Early-stage investment always carries considerable risk; investing in the cannabis space increases the risk. It is important for potential investors to understand the traditional risk of this asset class and also those risks uniquely associated with this vertical market,” cautioned Kupetz.

Anauj’s investment reflects a growing trend in the cannabis buisness. Professional institutional capital is now involved. Earlier this summer, the Orlando -based First Green Bank (named for its focus on environmentally conscious investments) became the first financial institution in Florida to bank the Florida medical cannabis license.

According to a report from New Frontier Data, the growing legal cannabis market was worth an estimated $7.2 billion in 2016 and is expected to grow at a rate of 17% annually. Sales for adult recreational products in 2016 totaled to $2.6 billion and are expected to grow to $11.2 billion in 2020.

In an effort to continue the growth of Mountjoy and share in the growth of cannabis sector, Jamie Ngo ‘18 and Horan, president and vice president of the Rollins Collegiate Entrepreneurs’ Organization (CEO), will be heading to the national CEO conference in Tampa later this October.

There they will pitch the cannabis-infused sparkling beverage company. In addition to pitching Mountjoy, Ngo and Horan will learn more about student enterprise creation at the conference. They hope to bring that knowledge back to the Rollins student body.

EDIT: A previous version of this article displayed a picture of Allen Kupetz ’14, a Rollins alumnus not associated with this article.

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