Retail investors or guinea pigs?

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There’s a paradox when it comes to retail investors: many startup-related deals are out of reach for them (partly for their own sake). However, the laity have also been targeted by new schemes hoping to draw on their wagers and savings. Are non-professional investors taking on more risk than they should? Let’s explore. — Anna

Opium to the masses

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I am by no means an expert on stock markets. But recently, while writing about cannabis and psychedelic startups for TechCrunch, I found that some of the young companies in these verticals are listed in trading markets that I have never heard of. I mean, I heard about “pink sheets” – in The Wolf of Wall Street. I just didn’t think OTC securities would ever be used by startups. It seems that the need for money for drugs makes you creative!


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I have nothing against innovation, even when it comes to fundraising. But the fact that listed cannabis companies, many of which have gone public with nascent earnings more like startups than mature companies, have seen their market capitalization drop is likely no coincidence. And when we consider the period of hype around their public debuts, it’s hard not to wonder how many retail traders got burned.

We don’t just discuss the most obscure exchanges. Nasdaq-listed cannabis companies such as Akanda and Tilray have also seen their value plummet.

My take is that we are seeing a new group of psychedelic-focused companies following in the footsteps of cannabis companies, not just a guess. “Founders are in an unreasonable rush to list their cannabis and psychedelic companies on the stock exchanges.” – Venture capitalist Bek Muslimov told me.

Muslimov is a co-founder of a specialized investment company. leaf tunneland he sees danger in hasty announcements. “In this pursuit, the founders and management teams bypass the private finance markets, which are made up of professional and conscientious investors such as venture capitalists or capital growth funds,” he told me via email.

The problem here is not that private investors are missing out on attractive opportunities. The problem is that they would initially refuse to invest. Not because they don’t invest in cannabis – few do. But Leafy Tunnel is one of them, which means his point of view matters here.

Muslimov objects to cannabis and psychedelic companies going public, even though they would not pass the VC criteria for funding. “Unfortunately, this could lead to a situation where companies with poor business fundamentals and a lack of maturity will be listed, allowing them access to retail investor funds.”




Credit: techcrunch.com /

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