Intro: [00:00:00] Welcome to Kaya Cast the podcast for cannabis businesses looking to launch, grow, and scale their operations.
Tommy Truong: Hey everyone. Thank you so much for joining me today. Uh, this is part two of our, our conversation with Ernest. If you haven't heard part one, highly recommend you listen to that last week's episode. Uh, we talk about Ernest's journey from MJ Biz Con to starting BIPOCann a consulting business that helps social equity applicants, uh, during the pandemic, his struggles during his own business.
I'm sure that we can all relate to that being entrepreneurs as well as his work with the Colorado Social Equity Program, uh, and the struggles that he sees Entrepreneurs make. The common mistakes that entrepreneurs make when starting their business, when opening up their doors. In today's episode, we talk about.
Raising money. It's [00:01:00] never fun to raise money. It's a grind. Nobody likes it, but there's a science to this. So Earnest goes through what should be in a pitch deck, as well as why concise is better than anything. You have to be concise in the pitch and not only, you gotta think, really think about it from the lens of an investor.
They see thousands of pitch decks all the time. They don't have the time really to go through a 40 page. Uh, deck, but it also helps you understand your business so much more because you can cut through the noise and just present what's the most important, why you matter. Why you exist. So we talk about that as well.
Uh, I hope you guys enjoy.
So if I was a, a business today, a brand, a cultivation, retail, et cetera, and I'm looking to raise money, how should I AP approach? What should be my approach be before talking to investors? What do I need to have ready?
Ernest Toney: I mean, you should have, [00:02:00] I, I think it's important to have a deck of some sort, you know? And, and, and I don't think, and, and I've seen, I've, I've had people come to me, come to me and they've, um, I've, I've seen so many different, like, pitch decks in the past couple of years. But, um, one of the things that I notice that's pretty common is people put too much information, it's like too wordy.
Um, and usually it's too lengthy, like. There was, uh, one group that I was meeting with, um, about a year ago, and they showed me their deck and it was something like 80 pages long. And I was like, no one's gonna read that. You know? And then there was another group that I worked with that gave me like a 25 page deck, and I said the same thing, like, no one's gonna read it.
And at the end of the day, like, I really think that you can create like a pretty solid starter deck with like eight to 10 pages, but it really requires you to, you know, simple is hard. [00:03:00] Being simple is hard. Like you're excited about your ideas and, you know, um, maybe you've had some successes and traction, so you're like, what is it that I can convey?
But I think that, um, I see if you're a new brand,
Tommy Truong: Yeah.
Ernest Toney: you need to clearly articulate like, what is, like the problem that you're solving within the market. You need to showcase like why you're the solution. You need to maybe talk a little bit about your traction and some of the successes that have happened so far.
Um, you should list your, um, you know, a little bit of information about the competitive landscape, basically. Like why should someone choose to work with you and show that you understand like where you fit in the market. Um, you should show, uh, you know, your team, like who's involved that's gonna actually help you bring this idea to the table.
Uh, you should show, [00:04:00] um, some financial projections, basically, like, where are you? Like what are some successes that you've had right now? And if you haven't brought in revenue, like you should, at least you should. Whether, and regardless of whether you've made revenue or not, you should show your projections and how you're going to use those funds.
And I think that, um, you know, it needs to be professional. Like I think a lot of times, um, you know. Good presentation and, uh, good delivery in story can do a lot. Um, I think also, you know,
it's like you, I, I think so many, I think a lot of brands, a lot of business owners could benefit by like, going through coursework like that. And it's like, it's tough, right? Because you have this idea and maybe the state's saying, all right, you have a threshold where you have to come up with funds to, to show that, you know, you can continue to keep doing business [00:05:00] and you're panicking for all the different reasons.
But, um, you know, if you really are trying to raise some dollars, and I'm not even saying like that, it needs to be an investor deck. Like maybe you are trying to find people from the community to, um, sponsor you or to, um, um.
Or, um, or just to, you know, be backers like you need to have basic elements that can communicate like the value and why it's a no brainer for those companies or those individuals to work with you.
Tommy Truong: I think even if you're not raising money and you're first starting out, that investor deck is going to give you such a clear, concise way to communicate your business. If you look at an investor deck, it, it includes all of the major elements that you should really have a clear understanding of,
Ernest Toney: Mm-hmm.
Tommy Truong: right?
You, we have, um, your position in the industry, why you guys are unique, [00:06:00] why you guys are different, right? Why you guys are unique, how big the market is. What is the potential, how much money you need, what are you gonna use it for? Pretty basic stuff that you have to have an understanding of. And the, the, the act of doing it in an investor deck, like you said, and having it super concise, is such a neat way to really understand your business better too.
Ernest Toney: Yeah, it really is, really is. Um, I agree. I mean, I think everybody should do that exercise. And I told you like when I got my business started, I did that whole lean canvas exercise. And, and that's actually something like, you know, when I did the first, my first mentorship programs like three years ago, um, we took all of the participants through a similar workshop and like I workshopped the exact same thing.
I was like, look, this isn't just something that I pulled from, you know, um, an online surgeon. Like I did this like for my business and here's the successes that we've had because, you know, that tool gave me a lot of clarity and. Um, you know, I held onto that canvas. I still have that [00:07:00] first canvas and I can look back and be like, oh man.
Um, some of these assumptions were great and some of these things were like so off that it's like laughable now. But I did the exercise, right? And it's the same thing with a deck. Like, um, it's sort of like building a resume, right? Like the first time you do it, it's probably not gonna be that great, but, you know, eventually you get better and better and better and you understand the story and the narrative and you know, and, and then if somebody asks you about to, you know, to tell like, you know, to, to interview you, right?
You can, you can answer it. 'cause you know it, you practice it, you same thing, right?
Tommy Truong: I want to go through an example actually, of this. 'cause I feel like, um, when I'm, when I'm listening to a concept, it's just easier for me to attach it to a story or attach to example. It just helps a lot. I say that I have a business idea. Um, my business idea is, Hey, you know what? [00:08:00] We're gonna start a dispensary.
Uh, but we're, what we're really gonna focus on is this demographic. Maybe it's. Women in, you know, that are 30 to 60, whatever. And we're now, what, what we wanna do is we want to focus on, instead of recreational users, more health. So in the cannabis space, you have recreational, you have, um, medicinal. And then, and health for me is an emerging, it's not there yet, but you have all of these cannabinoids that really help you sleep, gut, think all of these things, right?
That is useful to the average person, that this doesn't want to get stoned every day. And I know that these people live in these pockets of town and the industry in itself is $70 billion. How should I position that story in a deck that resonates, um, [00:09:00] with potential investors?
Ernest Toney: Yeah. So, um, I think you like outlined like the, the need, uh, you identified that, um, there's, um, a market, uh, there's potential, maybe there's interest. Um, I would, I would also like focus on, um, you know, competition. You know, are there any, is there, like what are some of the alternatives? Okay, well, where are the other places that, you know, women of this age group are, you know, um, seeking health, uh, benefits and it.
Might not even be, you know, cannabis related at all. It could be yoga, it could be health food stores, it could be gyms, it could be things like that. So you start listening about like, what are all the different, you know, um, um, complimentary or, you know, competing, um, providers of health-based health and wellness services that appeal to this [00:10:00] demographic.
You might even want to take a look at some of those and figure out like what their spend looks like. So you can say this is comparable. It's like, okay, well I see that, you know, like these studios centers and or this like facility is generating, you know, x million dollars a year and you know, our business is gonna be in a similar, um, location with similar foot traffic.
And um, you know, like we think that we can capture a percentage of this market. So I think do your due diligence to learn about, um, the market. 'cause you can niche down even more to, to figure out like, um, why this is a no-brainer for someone to invest in you. Uh, I also think like if there's a good story that you can tell with that, so maybe there's part of your, um, ownership or, or or leadership team that um, you know, is that, you know, target demographic or you have people that have experienced like, um, selling [00:11:00] and working with that demographic, then that's gonna build confidence, you know, in the investor.
To the investor. Because you can say, I am this demographic. I work with this, I have demographic, I've sold to this demographic. Um, I think the other thing is being able to show that you have like a revenue model that's actually realistic, that is gonna help you hit some of the Ben benchmarks and you need to figure out like a marketing strategy that's gonna help you get there too.
So like, um, I think, you know, maybe you have like a unique way, maybe you decide that like there's some type of, um, app that you're gonna use to, you know. Maybe you already have some attraction, maybe some traction, maybe like somebody on your team has created like a, um, a group or a newsletter, or a blog or an app that already has interest here and you've surveyed people and you've figured out that if this was an option that was available then, you know, 50, [00:12:00] 70% of the people they would buy.
Tommy Truong: Kind of like, like, uh, how do you de-risk, de-risk that investment?
Ernest Toney: Yeah, yeah. Yeah. That's really what it's getting at. You know, you're trying to, and you don't wanna BS any of this stuff. It's like you actually wanna do the work and, and, and, because honestly, like the worst, I, I mean's say you are lucky enough to get the investment and then, you know, like if you're making up a lot of this stuff and then these folks are like, okay, well you said that you have all of these things that you know now you're gonna be on the hook to, uh, try to.
Tommy Truong: Then also to your point, I think it's good. This could be a really good vehicle for you to assess viability as well. Like you're going through that motion and this is just a good exercise altogether.
Ernest Toney: Yeah. Yeah, absolutely. And you know, another thing that you could do is like, let's say you're in, you, you're in a market that does have, you know, um, a dispensary. And maybe one of the things that you, maybe one of your ways to do the market research is like, you've [00:13:00] already gone in and, you know, figured, offered some type of program or partner with some retailers and you realize that there is a demand.
And, you know, these customers said that, yeah, I, if I had a place that specifically like, you know, met me here and, and was health focused and I would show up, but you have to, you know, again, you know, look at everything in the supply chain, look at the market, figure out like your, that you have a business model that is going to, that's gonna work.
So.
Tommy Truong: Ernest, A lot of people get really dejected when they're raising capital. It's raising capital is not a fun exercise. It takes you, it's not a fun exercise. And I always ask, okay, how many investors have you talked to? How many vets have you gone? And it's never enough. Can you speak a little bit to how much volume you need?
How many conversations, uh, do you need to have in order to, to really raise money? Um.
Ernest Toney: Yeah, I mean, [00:14:00] well this one, okay, so I know it's a lot, right? And I can tell you that, um, and I'm not even sure if I'm really like. The best, like use case or sorry, the best, uh, the, the best person to answer this question just because, um, you know, we bootstrapped our business and I would say like, so we haven't had like that investor backing like from, you know, like a VC where we've gone through a raise.
But, um, I've gone through like, uh, I've, I have, but I have, you know, been in front of investors and I've talked to dozens and dozens and, uh, I have received feedback and said, you know, we think that this is the thing that looks good, but you should improve here. Um, at some point I made a decision that, um, you know, after, probably like right around like year three, that.
Uh, I wasn't going to actively pursue investment for the near future. Um, and part of that is [00:15:00] because like the revenue model that I created was working. And, um, much of the relationships and much of the drivers of my business are, are also coming from, uh, state-based contracts. So, but like, the thing is, like, you still have to go through that process.
Whenever I've rate, whenever I've had to, uh, get a customer, you know, to, to become a, a member or a client whenever I've worked with, you know, large brands to get them to sponsor programs, companies like Wild and w it's like you have to go through the process of, um, you know, creating a presentation, um, understanding what their goals are.
Figuring out that alignment and then delivering on the promise that you said that you're going to do. And if you do that well, you know, like they see impact and they want to keep working with you. And the next time you ask for, you know, um, you know, sponsorship, you might be better positioned to get more.
And, uh, same thing works with the government contracts. [00:16:00] Uh, but either way it's, um, I, I would expect that, you know, if somebody is actively going through like the investor in the fundraise process, like yeah, I mean, you'll have the fluke, you know, you have the Fluke home run where, uh, you know, somebody will, you know, within the first like couple of, you know, meetings they have their funds.
But, you know, a lot of people that I've talked to have said that they've talked to hundreds of investors. And, um, it is, it can probably be like a volume and a numbers game, but, um.
Tommy Truong: It's, it's a process for sure, and the, the first time you do your presentation will be vastly different than the hundredth time you do your presentation. You'll be a different person.
Ernest Toney: yeah, yeah. Um, I will say that, um, one of the things that, um, you know, we built like a good relationship with, uh, you know, with several [00:17:00] investors, and that's been great because I've been able to, you know, pick their brains and also have them in the rooms, um, or even involved, like with some of the programs that are run so that they can build relationships directly with, um, with, uh, you know, folks that, that we touch.
So,
Tommy Truong: Awesome. Ernest, is there anything that we haven't spoke about that you feel that entrepreneurs should know?
Ernest Toney: um, I'm sure there's a lot more.
Tommy Truong: That's a loaded question, right? It's a million things.
Ernest Toney: Yeah. Yeah. No,
I think, uh.
Tommy Truong: have to have you back on board, uh, back to.
Ernest Toney: Yeah, this was super, this was so fun and like thank you so much for the invite and also just the, the time, like talking about this, uh, you know, I, I feel like, um, you know, I talked a little bit about like the start, you know, my journey like from going to MJ bizz to starting Bipo can, and [00:18:00] then even seeing like the shift in like where my attention is going with our efforts.
And it is leaning even more into, um, you know, um, helping more like entrepreneurship, coaching and trying to help the businesses, um, navigate these early stage, um, you know, challenges. And, uh, I don't know. I find a lot of excitement out of that. And, um, it's also pretty cool to see like some of the folks that have worked with, uh, be in positions where, you know, they have, you know.
Gone from an idea to, you know, pre-revenue, to, you know, making millions of dollars in revenue each year. It's like really cool, um, to, to be a part of that process. So, uh, I think the last thing I'd say is just, um, I think it's important to also, I make sure that, um, the thoughts that you're consuming are, um, are healthy ones, right?
Um, [00:19:00] so when things go bad and they will go bad as an entrepreneur, um, that negative self-talk can be a killer for you. So, you know, I, I've found it really helpful to, and I've seen the people who've been very successful, um, be the folks that subscribe to, um, you know, podcasts or they're reading like business books.
They're reading entrepreneurship books. It's like, even though you are starting a business in cannabis, um, you also should remember that you have. You're also like an entrepreneur, so learn how to be that as well. So as much as you're gonna research on the industry, like research, like the art of business and entrepreneurship and, um, that's the last, you know,
Tommy Truong: I love, I love that advice because the cannabis industry is so young.
Ernest Toney: mm-hmm.
Tommy Truong: It's, we have a lot to learn on the outside, like restaurant industry, been around forever. Uh, there's so many other industries that have solved the problem that [00:20:00] you're looking to solve. That's not recreate the wheel.
Ernest Toney: Yeah, I agree. I agree. There's like a lot of, you know, there's a lot of, you know, a lot of other industries and, you know, business models that you can reference. But Yeah, and you know, I think we're going through a little bit of a rough patch in the industry over the past couple of years, but I also wanna remind people that it's still very young, you know, and there's so much room for innovation.
Like I said, I mentioned several times, I'm in Colorado and you know. We started having like adult use sales in 2012. Like that wasn't even, you know, barely a teenager. You know what I mean? Like we, uh, we have, so we're just at the beginning of what this industry's gonna do, so, you know, um, being it for the long haul.
Tommy Truong: Ernest be Before I let you go, how can our listeners find you?
Ernest Toney: Yeah. Um, you can find me on, on LinkedIn, you know, uh, [00:21:00] Ernest, Ernest Loni, or just search Ernest. Tony, you'll find me. Um, you can also visit, uh, my website, BIPOC Can B-I-P-O-C-A-N n.com. And, uh, those are two great ways to, to connect with me. Um, you know, we will be, um, having like a, uh, a. Sort of like a, a spinoff, uh, that, that's coming in the upcoming months.
So we have like a new LLC that's gonna be really just focusing on like the, the, um, the entrepreneurship side of things.
Tommy Truong: What? You gotta come back. Let's
Ernest Toney: I don't know, we're gonna, so we're gonna broaden, you know, our reach because like a lot of the concepts that, um, you know, we talked about and the advice and successes that we've had, um, you know, I think there's a lot of folks that can benefit from it in, in the industry.
Um, so, you know, that goes for service providers as well. I know so much of our focus has been on, um, the licensees, but, uh, but yeah, [00:22:00] we're gonna be, we're gonna be launching something new, uh, by the beginning of the year, so,
Tommy Truong: Love it. We'll, we'll have you back so you can talk about that. Guys, if you are looking to jumpstart where you're at, definitely reach out to Ernest. You know, I'm sure that you guys are just, just connect, right? Like, just connect. You never know where it goes. Ernest, thank you so much for coming on today.
Ernest Toney: Hey. Thanks Tommy. Appreciate it man. Take care.
Outro: Thanks for listening to the Kaya Cast Podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast in your favorite podcast or visit our website.
