An (IPO) initial public offering is the process by which a private company can become a public entity by sale of its stocks to the general public. Investing into a pre-IPO company has its upsides and downsides for private investors. According to Investopedia, post-IPO company offerings, and its shares start trading on a stock exchange, its share price is determined by supply and demand for its shares in the market. If there is a high demand for its shares due to favourable factors, the price will increase. 
Canadian and USA companies Aurora and Canopy Growth were some of the first cannabis companies to list on the stock market. Canopy Growth, now worth $15 billion (2019) first listed on Toronto’s TSX Venture Exchange in 2014 via a reverse takeover of a capital pool company. Shares closed that first day at C$2.59 and have gained over 2,139% since then. 
Canopy’s success is a positive representation of the potential in the market and there are likely many investors regretting not investing in the early stages of the ‘green rush’… But it’s not too late, Eco Equity was recently valued by Baker Tilly, at $210m – before even reaching its fully-operational milestone and at JPD Capital we will shortly be announcing further regions in Europe where new fund products will be emerging.
The National Institute for Cannabis Investors believe you should invest in cannabis start-ups for diversification benefits and exposing yourself to the higher risk opportunities that yield a higher return for an investor’s portfolio. NICI also have a fairly sentimental approach to cannabis start-ups as they believe that when you invest in a start-up, you’re investing in a small business full of entrepreneurs just like you and your investment makes you part of that company’s family. 
We believe in creating a strong family culture, you can check out what JPD Capital’s investors had to say here.
- Is the license to cultivate longer than a year? 4-5 years is optimum and is a valuable and tangible asset.
- What are their financial projections based on? It is advised to look for an independent assessment or investor analyst to confirm whether the projections have been calculated in a reasonable manner.
- Is equity sale managed by an administrator and who is responsible for compliance and governance?
- Are they regulated by the FCA?
If you enjoyed this blog you can check out investment in stocks, bonds and assets compared with cannabis right now to learn more about the investing marketplace amid COVID-19.