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Meet The Future Moët Hennessy of Cannabis
Company Overview
Brief: Toast is a national cannabis brand known for its cannabis pre-rolls called the Joint 2.0. The potency varies across products, from micro-dosed CBD+THC to high-potency THC. Toast has reported total sales of $12 million since inception with a projected growth rate of 100% over the coming years.
Key People: Co-founder and CEO Punit Seth (Bridgewater Associates and Accenture), Co-founder and COO Shovahn Rincón (10+ years as senior manager at Accenture), Co-founder and Executive Chairman Chris Burggraeve (Global CMO Anheuser-Busch, Coca-Cola, Procter & Gamble).
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Terms
Security Type: Crowd SAFE
Valuation: $20,000,000
Amount Raised: $276,774
Minimum Investment: $100
Takeaway
Here's what I like: The Toast leadership team is stacked, beginning with former global CMO of Anheuser-Busch, Chris Burggraeve, who is involved as co-founder and executive chairman. Additionally, the remaining co-founders (including CEO Punit Seth) come from Accenture.
This matters because despite what you might think, prior cannabis experience has proven to be relatively insignificant. The biggest factors for Toast will be managing margins, navigating regulations, and creating brand value. And this leadership team has the right experience to address these needs.
Last and most notably, the TAM [total addressable market] is HUGE!
Here's what I don't love: I have to at least mention the regulatory risk. While I personally believe cannabis, like gambling, is too big of a financial opportunity to not become mainstream — there is always the risk that Uncle Sam does not agree.
Beyond legalization, my only nitpick here is Toast’s ability to differentiate. While I absolutely love the packaging, the entry level Joint 2.0 concept, and overall “affordable luxury” brand vision… nothing is stopping a future competitor (i.e. Coke v. Pepsi) from entering the market.
That said, ask Jony Ive what great design can do for a brand’s moat!!
Who should invest and why: Cannabis is still hotly debated — those that do not partake tend to have strong feelings about those who do. However, if you indulge in cannabis use, it probably goes without saying that Toast could be a fantastic opportunity to invest in the upside of a rapidly growing category, while at the same time backing a product you might actually love (win, win!).
As for price, it’s probably a tad high for Toast’s current level of traction.
The company generated $1.3 million in revenue last year (a 15x revenue-to-valuation multiple). But relative to the market opportunity, leadership team’s experience, and the fact it managed to nearly double revenue from 2020 while simultaneously cutting expenses by more than 2.5x — I’m actually pretty neutral on valuation.
As always, startup investing is super high-risk, and anything can happen. Don't invest anything you can't afford to lose.
Invest in Toast here 👉 Term Sheet
DM’s open on Twitter & IG 🤳 @kitun.