Ross Lipson comes from an entrepreneurial family, so perhaps its no wonder that as a college student, he dropped out of school to jump into the online food space, including co-founding, then selling, one of Canadas first online food ordering service startups.Its even less surprising that having gone through that experience, Lipson would use what he learned in the service of another startup: Dutchie, a two-year-old, 36-person, Bend, Ore.-based startup whose software is used by a growing number of cannabis dispensaries that pay the startup a monthly subscription fee to create and maintain their websites, as well as to accept orders and track what needs to be ready for pickup.The decision is looking like a smart one right now.
Dutchie says its now being used by 450 dispensaries across 18 states and that its seeing $140 million in gross merchandise volume.
The company also just locked down $15 million in Series A funding led by Gron Ventures, a new cannabis-focused venture fund with at least $117 million to invest.
Other participants in the round include earlier backers Casa Verde Capital, Thirty Five Ventures (founded by NBA star Kevin Durant and sports agent Rich Kleiman), Sinai Ventures and individual investors, including Shutterstock founder and CEO Jon Oringer.Altogether, Dutchie (named after the song), has now raised $18 million.
We talked earlier today with Lipson about the company, its challenges and working with his big brother Zach, himself a serial entrepreneur who co-founded Dutchie and today serves as its chief product officer while Ross serves as CEO.TC: Its so interesting when siblings team up.
Did you always get along with your brother?RL: We complement each other strongly.
Im energy, Im sales and business development.
Im fast-moving by nature and the guy who wants to drive the car as fast as possible.
Zach is the one who wants to make sure that were doing everything right.
Hes the methodical one.
We really do understand each other quite well and appreciate each others strengths and weaknesses, which enables us to meet in the middle on a lot of things.TC: Its also interesting that youve both been founders beginning around the time you were in college.
Were your parents entrepreneurs?RL: Our father is a founder and has run his own business for the last 35 years.
Our parents also always pitched us that anything is possible and encouraged us to go for it.
He was the dreamer and our mom was the cheerleader, which is a pretty nice combination.TC: You started Dutchie a couple of years ago.
Is running this startup more or less challenging than your experience in the food delivery business?RL: Its our second year in business, and weve seen some explosive, unprecedented growth.
As for whether its harder or easier than food, were very product and user-centric, and by that we mean consumers but also dispensaries.
Were focused on the customer all day, every day, with a team that ensures that they have support, that they receive their orders, that the orders are out the door quickly or at least, ready for pickup.
We make sure the photos work, that different potencies are marked.
Our system is kind of like a Shopify of the cannabis space maybe meets DoorDash.TC: You dont deliver, though.RL: No.
We dont do delivery for legal reasons; the dispensaries [handle this piece].TC: Youre charging like other software-as-service businesses.
Do you also take a cut of each sale?RL: We dont charge on transaction volume.TC: Youre working with 450 dispensaries.
Is there any way to know what percentage of the overall market that is, and how much is left for you to chase after?RL: First, there are more than 30 states where cannabis is either medically legal or that have legalized the recreational use of marijuana and we operate in both types of markets.
Its hard to know the actual count [of dispensaries], because they are always being formed, getting acquired or going out of business, but counting registered dispensaries, we work with more than 15% of them right now.TC: Who are your biggest competitors? Eaze? Leafly? They also help consumers find cannabis and, in Eazes case, deliver it, too.RL: Eaze is more focused on delivery where were more focused on pickup.
Its also only available in California and Oregon, whereas were in 18 states.
They educate the consumer about online ordering, which is great, but they also own the consumer experience, where were really powering the dispensary.Leafly and Weedmaps are really different types of platforms; theyre mostly known for their dispensary and strain reviews, where were strictly an online ordering service.TC: Youve raised a big Series A for a company in the cannabis space.
Do you have concerns about there being later-stage funding available when you need it?RL: Its true the most investors still havent touched cannabis, though you are seeing bigger deals.
Thrive Capital led that [$35 million] round in [the online cannabis inventory and ordering platform] LeafLink [last month].
You saw Tiger Global [lead a $17 million round ] in [the software platform for cannabis dispensaries] Green Bits last summer.
Its a big advantage to the funds that can right now invest because there are these barriers to entry; theyre finding deals that are promising and they can get in early and without competition.Pictured, left to right, above: Ross and Zach Lipson