Tuatara Archives - Green Market Report

Debra BorchardtMay 3, 2022
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Cannabis marketing firm Springbig is dramatically reducing its valuation in its IPO deal with SPAC company Tuatara Capital Acquisition Corp. (NASDAQ: TCAC)to $275 million from the previously announced valuation of $500 million. In November, Tuatara Capital Acquisition Corp. said it reached a deal with Springbig to merge with an estimated equity value of $500 million of the combined company with a $300 million springbig enterprise valuation plus $200 million cash on the balance sheet from the SPAC.  On Tuesday, the sides agreed “that market conditions have changed since the proposed merger agreement was initially announced,” according to a statement. Although it is worth noting that Springbig’s annual revenue is just $24 million, making even the lowered valuation pretty frothy.

Paul Sykes, Chief Financial Officer of Springbig, said: “These latest developments represent further significant steps towards completing our business combination with TCAC. The amendments to the terms of the merger have enhanced the value of this transaction to our public shareholders. By reducing valuation and combining this with the innovative structure of offering up to one million bonus shares to be issued pro-rata to non-redeeming public shareholders, we believe we have created an attractive proposition that adequately reflects current market dynamics. Additionally, the commitments we have received from the global institutional investor with respect to the senior secured convertible note, the CEF Facility with Cantor, and the previously announced $13 million common equity PIPE will ensure that springbig starts life as a public company with access to adequate capital to continue to scale our existing business and pursue our expansion strategies as opportunities emerge.”

New Financing

The companies released a statement outlining additional financing changes. Springbig and TCAC said they have an agreement for the issuance of senior secured convertible notes with a 24-month maturity, up to $16 million principal amount that has been subscribed to by a global institutional investor. “An initial tranche of $11 million will close in connection with the closing of the merger agreement. The second tranche of $5 million, subject to certain conditions in the agreement, will close 60 days after the resale registration statement is declared effective by the SEC.”

Additionally, TCAC has also agreed to a $50 million equity financing facility with Cantor Fitzgerald LP. Jeffrey Harris, CEO of springbig, added: “We are delighted to have the support of Cantor and an institutional investor. The growth opportunity ahead of springbig is significant as we look to strengthen our core loyalty and marketing communication capabilities, execute our expansion strategies, and deploy the additional capital we receive from our transition into a public company.”

2021 Earnings

In March, Springbig reported that it had strong year-over-year revenue growth of 58% to $24 million in 2021 from $15 million in 2020. Gross margin improved by 4% YoY to 71% in 2021 from 67% in 2020 and the retail client base increased by 63% from 759 in 2020 to 1,240 in 2021.


Debra BorchardtNovember 9, 2021
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Cannabis tech company Springbig is going to become a publicly-traded company through the SPAC Tuatara Capital Acquisition Corporation (NASDAQ: TCAC). The new symbol when the company begins trading on NASDAQ will be SBIG. It is expected to close in the first quarter of fiscal 2022.

According to the company statement, the estimated post-transaction equity valuation will be approximately $500 million, with roughly $200 million cash on hand after closing. That’s a fairly frothy valuation considering Springbig is only on track to report $24 million in revenue for 2021.  It seems the argument for the estimated value is the belief that Springbig expects to capitalize on the steady growth in cannabis retailers as new recreational markets emerge across the U.S., in addition to capturing larger marketing spends from cannabis brands as they work to obtain direct access to consumers through high engagement, omnichannel solutions.

Jeffrey Harris, Founder and Chief Executive Officer of springbig, said, “The key to our success has been empowering our clients by connecting them with their customers and engaging directly as they scale their businesses. Clients can use our SaaS platform to drive increased customer spend, build brand loyalty, and increase their potential reach. We pride ourselves on providing marketing-leading technology solutions and an exceptional level of service to springbig clients. This leads to excellent client retention, providing a robust base for strong future growth. As the cannabis industry continues to grow, this strong foundation will enable us to leverage our data and technology to consolidate across multiple market verticals including data analytics, increased marketing automations, and advertising solutions.”

Harris will continue to lead the company following the closing of the transaction. Current Chief Financial Officer, Paul Sykes, who has significant experience in high-growth SaaS businesses in a public company environment, will also continue in his role. Springbig serves over 1,000 clients across the United States and Canada, compromising more than 2,300 retail locations, and has over 41 million consumers enrolled in its proven B2B2C platform, through which more than 90 million transactions have been processed in the past twelve months with attributable gross merchandise value (“GMV”) of over $7 billion.

“In the rapidly evolving cannabis industry, with numerous regulations and restrictions, springbig has emerged as a market leader in direct-to-consumer marketing and engagement. Springbig’s technology platform drives loyalty and customer engagement, and in this regulated environment, a high level of engagement is crucial for cannabis retailers and brands to reach their customers in an increasingly competitive market,” said Al Foreman, Chief Executive Officer of TCAC. “The extremely talented and experienced team at springbig has harnessed the technologies necessary to address this market opportunity, and they are well-positioned for long-term, sustainable growth as new states progress legalization frameworks and with the potential for Federal cannabis policy reform on the horizon.”

 


Debra BorchardtSeptember 8, 2021
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Cannabis breathalyzer company Hound Labs, Inc. has raised $20 million from a variety of cannabis investment groups. Investors in the company include Entourage Effect Capital (EEC),  Intrinsic Capital, Benchmark, Icon Ventures, and Tuatara Capital. The company raised the funds in order to scale production of the HOUND MARIJUANA BREATHALYZER. Hound Labs says it has developed a patented and one-of-a-kind ultra-sensitive technology that is at the core of the company’s first commercial product.

“The groundbreaking breath testing technology created by Hound Labs provides a substantial competitive advantage to the Company,” said Dov Szapiro, Managing Partner at EEC. “The Hound Labs team has accomplished an impressive scientific achievement – precisely and consistently targeting one specific type of molecule out of the more than 3,500 different compounds found in breath. Not only are we excited about the immediate capabilities of the Hound breath technology to measure recent cannabis use, we are also excited about future applications that can detect pathogens such as SARS-CoV-2 or biomarkers for disease by changing the targeted compound.”

Cannabis use testing has been notoriously difficult. Unlike alcohol use, which is relatively easy to measure with traditional breathalyzers, cannabis consumers often show positive results long after actually consuming the product making traditional methods unreliable. Hound Labs says its product has been designed to isolate recent cannabis use by specifically measuring THC1 (the primary psychoactive ingredient in cannabis). The company noted that the ability to determine when an employee used cannabis is critical now that most adults in the U.S. can legally use recreational cannabis outside of work hours. While Amazon made news recently by saying it wouldn’t test employees for cannabis use, it specifically carved out drivers from that statement.

Hound Labs claims to be the only ultra-sensitive cannabis testing solution that identifies recent use that correlates with the window of impairment, allowing employers to keep employees who might otherwise test positive via conventional cannabis tests of oral fluid, urine, and hair.

“In order to manage our supply chain and meet demand for inventory, we have been reaching out to employers on our Wait List to understand the volumes required for our commercial units in 2022,” stated Dr. Mike Lynn, CEO of Hound Labs. “The response has been incredible. We are negotiating multi-million-dollar contracts with companies from a variety of industries who want to secure HOUND MARIJUANA BREATHALYZERS ahead of our 1Q22 commercial launch.”

The Company was founded in 2014 by a team including CEO Dr. Mike Lynn, an ER physician, reserve deputy sheriff, and former venture capitalist. The HOUND MARIJUANA BREATHALYZER is intended to detect recent marijuana use. The company said that its product does not measure whether, or how much, a person is impaired and that it is intended solely for use in law enforcement, employment, and insurance settings.


StaffSeptember 13, 2017
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Colorado-based Green Dot Labs announced that it closed its Series A capital raising round with a $3.3 million investment from Tuatara Capital, L.P. Green Dot is located in Boulder and makes cannabis extracts.

CEO and Co-Founder Alana Malone said, “To date, Green Dot Labs has focused on developing quality-driven indoor cultivation and extraction methodologies and delivering high-end products to the Colorado market. Tuatara shares our commitment to producing quality cannabis products as well as our vision for innovation and regulatory leadership. We are confident that our partnership with Tuatara will support our company in reaching its full potential as a leader and standard-bearer in cannabis and concentrate production.”

The funding will be used to improve the cultivation and extraction platform in Colorado. A new extraction lab is projected to be finished in early October and the company said it would help to significantly expand production capacity. Green Dot also anticipates that its premium medical marijuana brand Black Label Nectar will debut in the adult-use market in October of this year.

Al Foreman, Partner at Tuatara Capital said, “In a highly-competitive concentrates market, Green Dot Labs has distinguished itself through its relentless pursuit of excellence. The founders have spent years perfecting their craft, and these efforts have driven Green Dot Labs’ peerless product quality in a market where the demand for high-caliber concentrates is stronger than ever. We look forward to building on Green Dot Labs’ strong foundation to further support innovation, growth, and new market expansion.”

mCig (MCIG) also announced that it is closing its efforts to raise $3 million, falling far short of that goal. The company raised over $1 million or roughly one-third of its target at 25 cents per share. The stock was lately trading at only 17 cents per share. The capital raise is set to end on September 30 and could be extended if the company deems it necessary.

The company announced its first quarter financial results last week, but did not do so in a formal filing and instead chose to use a press release. The company just filed its audited annual results for the year ending in April in August.


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