Interview with Antony Radbod and David Kivitz, Co-Founders of Archytas Ventures
On May 1, 2019, David Kivitz, Co-Founder of Archytas Ventures, will be speaking at Kahner Global's 4th Annual Cannabis Private Investment Summit in Beverly Hills, CA. The event will host more than 150 industry leaders and investors for a day of collaboration and networking.
1. David and Antony, tell us a little bit about each of your backgrounds, and how you got your start in the cannabis industry.
Antony: Prior to co-founding Archytas Ventures, I was an investor/advisor and start up-entrepreneur. Operations of the companies I co-founded, grew aggregate revenues to over $260M. Working The companies I co-founded and invested/advised include a digital content marketing agency, a real estate development firm, a SaaS technologies business and a growth consulting enterprise for emerging markets. Acquired in 2015, our digital content agency further refined unique digital marketing strategies we developed while working with Fortune 100 brands, government agencies (foreign and domestic) and non-profits. Prior to my entrepreneurial endeavors, I worked in product development and marketing.
David: Prior to co-founding Archytas Ventures, I was a Managing Partner at Alta Verde Group, a company I co-founded to acquire distressed real estate assets resulting from the housing market crash in 2008. The company successfully grew to over $50 million in annual sales and was recognized as the #3 Fastest Growing Private Company in 2015 by The LA Business Journal. I was responsible for overseeing all deal acquisitions, asset management, and financial guidance for the company and its subsidiaries. During my tenure at Alta Verde Group, I structured and closed in excess of $250 million of land financing, debt, and equity to achieve scale for the company. Prior to co-founding Alta Verde Group in 2008, I worked in the Fund Investments Group at Hamilton Lane Advisors (Nasdaq:HLNE) and the Structured Finance Group at Capital Source (NYSE:CSE).
2. How did Archytas Ventures come to be?
A: Timing. David and I had both just completed successful exits of our prior businesses. We felt strongly that cannabis was going to be the largest growth market of the next decade, and did some traveling around the USA to visit existing cannabis businesses in new and mature markets. We wanted to really understand the pain points and challenges of the industry and identify the opportunities. We also spoke with investors from our past businesses and realized there was a meaningful appetite for the sector.
3. What was Archytas’ first investment in the Cannabis Industry?
D: Our first investment was with Halo Labs, a cannabis extraction company that develops and manufactures high-quality cannabis oils and concentrates. Halo has expertise in all major cannabis manufacturing processes, leveraging proprietary processes and products, and has produced over 3.0M grams of oils and concentrates since inception. The forward-thinking company is led by a strong management team with deep industry knowledge and blue-chip experience. The Company is currently operating in California, Oregon, and Nevada.
4. It has been said that you’ve ‘disrupted’ the Cannabis Market. What gap do you fill?
D: Our team is comprised of executives with institutional investing backgrounds, both structured credit, and private equity, and have co-founded and scaled award-winning high growth operating businesses. We have used our diverse backgrounds to provide more than just capital to the companies we have invested in. Many of our targets are in rapid growth mode and we use our professional network to source strategic relationships, operating talent, and other value-added services to assist the management teams we partner with.
5. How are you solving the debt side of the market?
A: Our investment in Xtraction Services is a fantastic example of how we think debt and alternative financing can be supportive of the industry. Due to capital scarcity, cannabis and hemp companies are selling dilutive equity today to purchase equipment, which can be very expensive, rather than seeking alternative financing options because they are not widely available. Xtraction Services offers oil manufacturers/processors purchase finance and leasing options to acquire the critical equipment they need, while minimizing the upfront cost, like a home mortgage or car lease.
6. Why should investors look in to these ancillary companies?
D: Trying to pick the brands and cultivators that will ultimately survive the inevitable shakeout is risky. And, these businesses are subject to strict regulations and tax codes that work against their ability to scale effectively, like in other industries. Ancillary companies share in the rapid growth of the industry without having to manage the same restrictions that apply to their ‘plant touching’ customers.