Target audience – Name brand mid-market TargetCos, impact conscious family offices, angel peers, and professional managers.
A Strategic Shift
On March 6, 2020, ALAMidas Capital Partners Inc (ACP) while in Calgary, signed a Strategic Alliance with one of Canada’s leading bulk food processors and CBD extractor operators, engaged in the upstream segment of the hemp supply chain. On March 11th, the World Health Organization declared the global outbreak of COVID-19 a pandemic. By March 15th, Sunday, I held my last meeting prior to the shutdown of the entire Calgary public services. It also marked our pivot towards the development of the hemp consumer packaged goods category (CPG) or the downstream segment of the hemp supply chain.
Going back in time, on April 15, 2017, I officially landed in Calgary to focus on the development of the hemp industrial fiber ventures – construction materials, biocomposites, bioplastics, textiles – in the upstream and midstream segment of the hemp supply chain. After traveling across Alberta meeting farmers, agrologists, hemp startup entrepreneurs, government officials, amidst winning and losing business partners, by April 17, 2019, we initiated a Buy In Management Buy Out (BIMBO) of a TargetCo with the backing of a family office, subject to further balance sheet restructuring and reorganization of the TargetCo. Upon our failure to arrive at an agreement with the founders, it marked the beginning of our pivot to hitting on mid-market targets defined as minimum $10M ARR (annual recurring revenues) and $2M+ EBITDA, and operating as Independent Sponsors. For market centric entrepreneurs, the industrial hemp fiber sector is just too immature to warrant any more investment in resources while undergoing the COVID-19 unknowns.
COVID-19 put the world clock to a halt. It means focusing on the essential needs of society while in survival mode. For us, it means focusing on hemp food and hemp CBD within the CPG category or downstream segment of the hemp supply chain. I have re-coined the concept of “Whole Crop Utilization” to Whole Crop Commercialization, vertical integration to horizontal integration, with a laser focus on serving the needs of the B2B customers serving the end consumers. Instead of abandoning the industrial fiber strategy, we zigzagged focusing on the Green Building Materials industry, professionalizing the underdeveloped startups and renewing our Impact Fund Limited Partnerships (LPAs) or Special Purpose Vehicle(s) (SPVs). Our goal is to continue to accelerate the commercialization of our TargetCos with the objective of transferring them to our Impact Fund or SPVs at fair market values, to provide partial liquidity to our co-investors or early shareholders.
Balance Sheet Shopping While Recruiting Stakeholders
Ironically, COVID-19 has provided more opportunities. We have a shortage of mission and strategically aligned stakeholders. We are now engaged in “balance sheet shopping”. As a former Brascan product (now known as Brookfield Asset Management) I say to my fellow accountants, lawyers, and business developers, let us do what we do best. The entire cannabis (THC) industry leading players – Canopy Growth, Aurora Cannabis, Tilray et al – must focus on generating EBITDA versus growth and unwittingly creating a supply glut. With respect to Hemp CBD players it means re-positioning to play in either upstream or downstream, fight the FDA or work with the FDA, while acquiring market share. With respect to industrial fiber use, it is transitioning to “hemp blend” with less than 100% sustainable ventures or partnering with the green players, as the pathway to a healthier planet.
Consequently, ALAMidas and partners are in a more optimal position to invest as angels as well as invest as emerging fund managers. For me personally, it means dusting off my 10-year track record as a nutraceutical entrepreneur-investor and as a former Nutrition House franchisee. It means reviving prior relationships in the supply chain networks – nutraceuticals, functional foods, organics including revisiting former TargetCos in the CPG category. As founder of Healthy Crowdfunder, it means recalling former equity and pre-sales crowdfunding founder peers and arranging angel investment syndication. Now that I am back in Vancouver, I say hello again to former colleagues at VANTEC and Keiretsu Forum angels and the Association for Corporate Growth.
Call to Action
I am pleased with my Calgary team. It is time to rebuild our Vancouver, Toronto, and New York team as well as Beijing and Singapore, without having to start from scratch; assemble a balance of startup and mid-market entrepreneurs and professional managers.
I am seeking stakeholders to participate as co-investors, professional managers, and rain makers with the triple purpose – planet, people, profits. If you know what I mean, it is you that I want. We are at the pre-marketing phase of our capital raising program, while accelerating our discovery process, Letters of Intent (LOIs) either with strategic alliances or joint venture partners. After four years journey in the hemp space, I believe our evolving team is in a better position to deliver results. Do not wait until the regulations and its interpretations are fully ripe. Participate when the market is in fear and when the valuations are low. Invest in kind as well as in traditional currency, as though the COVID-19 macro economic impact will be felt like the Great Depression. Let’s get to know each other first.
Antonio is a financial executive, an entrepreneur, and an investor interested in co-financing and co-developing health & wellness, health tech/agtech, and other tech enabled businesses, from funding to exit. He leads an early revenue stage venture capital firm committed to change the world by supporting entrepreneurs driven to build a healthier planet and live a healthier lifestyle.