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Alternative Market Briefing

Investment in sin industries grows considerably over the past five years

Friday, July 19, 2019

Laxman Pai, Opalesque Asia:

Preqin in its Insights said that investment in sin industries has grown considerably over the past five years.

"Perhaps the most vociferous growth has occurred in the cannabis industry, which boomed after the drug was legalized at the state level in the US and scientists published further research into its medicinal properties," it said.

The increase in average deal size is indicative of a rise in valuations and, in turn, investors' confidence in the cannabis market: the average size of venture capital deals in the cannabis sector grew by a factor of eight from 2017 to 2018.

Jefferies believes the global cannabis industry could reach $130bn in size by 2029.

Vice Ventures, a New York-based fund manager, recently held a $25mn first close for its inaugural fund which will invest in 'vice' industries such as cannabis, gambling, and sex-tech - all atypical industries for traditional venture capital investors.

When Vice Ventures received backing from high-profile investors in the shape of Bradley Tusk and Marc Andreessen (co-founder of Andreessen Horowitz), then, the direction of venture capital investing swerved.

ESG and ethical investing have come under the microscope in recent times, with high-profile 'Social' indices and ETFs actively excluding companies within the weapons, gambling, alcohol and tobacco sectors. This focus seemingly juxtaposes with the cannabis industry, especially the recreational aspect......................

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