While cannabis investors normally are focused on publicly traded companies, there are a few major businesses listed on public exchanges that have made waves in the markets.
One of those is Pax Labs, a popular vape maker, which has confirmed today it will raise $420 million from institutional investors in an equity round. The most prominent of these is Tiger Global Management, Tao Capital Partners, and Prescott General Partners.
A spokesperson from Pax confirmed that the post-money valuation for the company is currently at $1.7 billion, a significant amount for the still-private company which hasn’t raised any funds on the public market yet.
The company first started in 2005 as a master’s thesis by two Stanford students before launching in 2007 with the intention of creating a cannabis vaporizer, PAX Labs expanded to provide vaporizers for a variety of cannabis products such as flower strains and concentrates.
“PAX is investing heavily in growing its brand as well as developing innovative new products to scale and capture an enormous opportunity,” said PAX CEO Bharat Vasan in a prepared statement. “This financing round allows us to invest in new products and new markets, including international growth in markets like Canada and exploring opportunities in hemp-based CBD extracts. We aspire to be the gold standard for safety and good stewards of a product that enhances many people’s lives. We are hiring and investing heavily in our people, who power PAX’s mission of establishing cannabis as a force for good.”
The San Francisco-based company has so far received a record-breaking amount of equity financing from Tiger Global Management and Tao Capital Partners. According to an investor presentation leaked last week, PAX is currently projected to boast $113 million in revenue for 2019, a figure that could jump as high as $1.2 billion by 2023. At the moment, PAX has sold 1.8 million of it’s second and third edition vape devices to date.
“People know about different kinds of alcohol. They may know that they’re a beer person or a wine person. But none of that exists within cannabis. They see names like ‘Lemon Haze’ and ‘Cherry Fizz’ and they don’t know what that is. These are all really awesome names for a band but not great to let you know what you’re consuming. We want to provide more clarity around what that means,” added the CEO according to TechCrunch. “Our biggest challenge is safe consumer access. Regulation is a good thing in this space. It makes standards higher and products more transparent.”
Vasan also went on to say that vaporizing cannabis represents over 25 percent of the entire cannabis market by dollar volume. The company, which doesn’t touch the marijuana plant itself, could conceivably list on a major U.S. exchange such as the NYSE or the NASDAQ in the future unlike other companies in the sector.
With the U.S. cannabis concentrate market estimated to hit $8.4 billion by 2022, almost equal to the $8.5 billion in projected flower sales, PAX Labs has a bright future ahead of it regardless of whether it lists on a public exchange or not.