Case Study: How Cannatrek successfully completed the largest equity crowdfunding offer of 2020
17 December 2020 @ 12:00am Equity Crowdfunding: Case Studies
Key Takeaways
In December 2020 Australian medicinal cannabis leader, Cannatrek, successfully completed its equity crowdfunding offer via OnMarket, the largest raise across all equity crowdfunding platforms in 2020.
The Company, operating a vertically integrated “seed to patient” model, reached their maximum target is just over 2 weeks of their public offer, raising $2.5 million from 720 investors. 74 investments over $10,000 certainly contributed to this.
The renewed positivity around the medicinal cannabis industry played a key part in the capital raise. In the month to 11 December 2020, 30 listed cannabis stocks showed double digit gains, with many in excess of 100%. This came off the back of the UN formally removing cannabis from its Schedule IV classification and the upcoming decision from the TGA on pharmacy distribution of low-dose CBD. This renewed confidence in the market saw Cannatrek raise over $1 million, double their minimum target, after just 24 hours of the public offer, laying the foundations for a successful campaign.
We are thrilled to be supplying such an important German partner [Nimbus Health], which gives us a toehold in the large European market.
- Tommy Huppert, Cannatrek CEO
Media coverage from ausbiz, The Green Fund and the announcement of an export agreement with German medicinal cannabis supplier, Nimbus Health, ensured that investments were consistent throughout the offer period. However, it was the live virtual tour of their Queensland facility, offering potential investors an inside look at how the medicinal cannabis is made and produced, that powered the raise to its maximum target. Following the live virtual tour, Cannatrek saw over $500,000 in investment come through, forcing the offer to close 5 days early as they reached their $2.5 million maximum target.
A quick recap of Cannatrek
Cannatrek is an Australian based medicinal cannabis company with the aim to be the lowest-cost producer of high-quality medicinal cannabis that will be available to consumers in Australia and overseas, via a vertically integrated “from seed to patient” business model. The Company is uniquely placed in the high-growth global medicinal cannabis industry, with a strong asset base, granted licenses and permits, revenues, and an outstanding team.
The market opportunity for Cannatrek is growing quickly following significant growth in recent years off the back of legalisation for both recreational and medicinal use. The global legal cannabis market is forecast to be worth US$103.9 billion by 2024, with the international medicinal cannabis market worth a potential US$62.7 billion by the same year.
To date Cannatrek has enjoyed strong quarterly revenue growth, increasing from $68,000 in the quarter ending 30 September 2019, to $811,000 in sales for the quarter ending 30 September 2020, an increase of almost 1,100% year on year. Revenue for the four months to 31 October 2020, has been $1.1 million, representing an annualised revenue run rate of over $3.4 million per annum.
What is next for Cannatrek?
With cultivation, manufacturing and distribution of Cannatrek products beginning earlier this year from their Queensland facility, the Company will continue the sales of its own products via established export and domestic distribution agreements. The development of their Shepparton facility will enable greater production capacity, boosting revenues as they strive to become the leading medicinal cannabis player in Australia.
