October 25, 2019

By Lynda Kiernan

Cannabis industry digital platform startup Flowhub announced it has closed on a $23 million Series A led by Evolv Ventures, a VC tech fund backed by Kraft Heinz, e.ventures, and Poseidon. Other contributors to the round include 9Yards Capital, former NBA commissioner David Stern, and co-founder and former CEO of Venmo, Iqram Magdon-Ismail, among others. 

Cannabis is one of the newest and fastest growing categories related to food and ag right now, with expectations that growth will pace at a CAGR of 23.9 percent, and its value will exceed $66 billion by 2025. However, as the industry booms and dispensaries multiply, regulations are far from uniform, leading to those in the industry having to navigate an often complex and foggy landscape. 

Amid such an environment, it follows that Kraft Heinz would make its first foray into the cannabis space via an investment in a tech startup focused on building out a digital platform that can help dispensaries maintain legal and compliant operations, while keeping pace with consumer demands and evolving state regulations.

“What we are experiencing right now is an end to cannabis prohibition and Flowhub is on the front lines of this movement,” said Kyle Sherman, founder and CEO, Flowhub. “Every legal transaction completed with the Flowhub retail platform is a positive step forward, and we are committed to helping our customers build thriving cannabis businesses.”

“Cannabis is not an industry that you just jump right into,” said Emily Paxhia, managing director, Poseidon. “The compliance and regulation aspects make this a unique industry and Flowhub is one of the leading cannabis tech companies that is taking a meticulous and strategic approach. We saw the potential for Flowhub’s technology and mission early on and we’re thrilled to continue to support them in delivering the cannabis retail experience of the future.”

As the fifth largest food and beverage company in the world, as has widely been the case in recent years among major CPGs, Kraft Heinz has faced multiple challenges in maintaining its market position as consumer demands and tastes rapidly shift.

In response, in October 2018, the company launched Evolv Ventures, a $100 million VC fund to invest in emerging technologies being developed to disrupt the food industry. Within weeks, the fund’s first investment was announced to be the acquisition of wellio, an AI food tech company that provides the services of a personal nutritionist, chef, and shopper through a single platform.

In the months since, the fund has gone on to add GrubMarket, a San Francisco-based farm-to-table food delivery service, and New Culture, a startup that uses fermentation to create dairy proteins for slaughter-free dairy products to its portfolio. 

Over the past year, Flowhub has seen significant growth, doubling its customer base across 11 markets, and seeing revenue increase by 200 percent.  It has also expanded its team with the addition of SaaS enterprise tech leader, Dave Smith as CRO, and increased its female management across key strategic roles in marketing, product management, and finance, with an overall increase to head count of 50 percent this year. The company also announced a new headquarters in downtown Denver, and the addition of three satellite offices to support its expansion.

“We are excited to join Flowhub at such a crucial time in the company’s overall growth journey,” said Jett Fein, partner, e.ventures. “As the demand for legal cannabis products rises across the U.S., Flowhub is focused on using technology to advance the future of the cannabis industry, and has built a cloud platform with a suite of applications that enables dispensaries to provide superior and tailored consumer retail experiences in this highly regulated industry. We support their mission and look forward to their continued success.”

This round has brought Flowhub’s funding to-date to $27 million, and will be used by the company to accelerate production innovation, to hire technical talent, and to expand its partnership ecosystem through future tech integrations and collaborations via an open AI approach.

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.