If you want to be an entrepreneur, the rarest ingredient is having the constitution to endure.

Company ideas are commodities, and todays best practices and the support infrastructure have become ubiquitous. Of the obstacles that do persist, information scarcity isnt one for entrepreneurs.

That isnt quite so if you want to be an early-stage investor.

Where an overdue and fierce battle for increasing representation among entrepreneurs is alive and well, private market investing remains a particularly clubby boys club of finance. The rules and advice and deals remain cloistered.

Thats why we at Technical.ly, with the support of Project Entrepreneur, a program sponsored by UBS, piloted Off the Sidelines, an angel investor education podcast. Over the last three months, we put out an initial season that outlines the framework of assessing early-stage investing as an asset class.

Private market investing has surged in the decade of growth that has followed the Great Recession. Worldwide, private equity and private debt, which includes venture capital and a tiny sliver of individual angel investing, grew by 44% in the five years ending in 2019, as reported by The Economist last month.

This can be a point for alarm, as frothy valuations follow idle cash and presage peril. But inside this growth has been a glimmer of change: Nearly a quarter of the 200,000 angel investors in the United States are women and 30% of those who made their first investment in the last two years were women, as of 2017.

If we want growth segments of our economy to benefit Americans with different backgrounds, change must come with the entrepreneurs and those making financial bets on those entrepreneurs. In truth, they relate.

Its with this in mind that we produced 10 episodes speaking to early-stage investors about their own journey and advice to getting into venture capital. Broadly, there are three pathways to early-stage company investing: doing it yourself as an accredited investor, contributing to a new fund from a venture capital firm or working at an investment firm.

All three have similarities, but for this season of Off the Sidelines, we focused on those interested in doing this themselves. Across interviews, there were many common themes. For one, all interviews cautioned against seeing startup investing as a vehicle to maximize financial returns, particularly as you begin this career. Your money turns illiquid and in a highly volatile category. Instead, active investors will advise you to focus on a contrarian worldview you have and see this as act of creation to contribute to that future.

If youre a high net worth individual, or aspire to be, here are some important takeaways to inform your early investing approach:

In Episode One, Village Capital cofounder Victoria Fram told us that early-stage investing is humbling. Even the best prepared investors will get things wrong. Its best to give your predictions time bounds, and hold yourself to it. That includes investing itself. You have to enjoy the work of it.

In Episode Two, Alicia Syrett of Pantegrion Capital told us that investors can have different relationships with the companies in which they invest. It depends on your strengths, and the needs of your portfolio. Do you want to have regular check-ins to debrief and discuss in depth, or are you strategically valuable for specific needs at different intervals? Be wary of either extreme distant dumb money or a micro-managing backseat driver but theres considerable range in between.

In Episode Three, Angela Lee of 37 Angels, which runs an angel investor bootcamp series, told us that new investors will sometimes linger on a response to an entrepreneurs pitch. This helps no one. She champions being transparent, upfront and clear. Develop a good sense of your interests and priorities. Move forward or dont, but whichever direction, be direct.

In Episode Four, Kesha Cash of Impact America Fund told us about the importance of subject matter expertise, and a view for a future that is different than most others. Her focus on shadow economies is an example of her belief that underrepresented corners of the economy will be best served by entrepreneurs who come from those same corners. Cash represented a common theme, that issues of representation can be a savvy investment thesis, not purely a philanthropic mission.

In Episode Five, Henri Pierre-Jacques of Harlem Capital told us about his thorough approach to due diligence, with a heavy reliance on industry trends. A common theme among early-stage investors is those who are data-first and others who are founder-first. Anyone will you tell you that you need both: A firm handle on the business and sector realities and a good gut for whether the team youre investing in can navigate the changes that will surely come.

In Episode Six, David Hall of Revolution told us that early-stage investors should have a strong stance on how they hope to impact the world, beyond a financial gain. All investors will remind you that it is unlikely youll have a strong financial showing quickly. Its important to have other priorities, like boosting the kinds of founders you want to see, or attacking an industry you believe to be weak or solving a big problem you think is being underserved. This helps make the case alongside your early middling returns.

In Episode Seven, Astrid Scholz of Zebras Unite and XXcelerate Fund told us that its important to understand how the existing infrastructure of investing operations works but you ought not settle for that reality. By making bets on what will come next, investors bend, however slightly, the direction of that future. Your dollars, then, contribute to how the world operates. Make sure youre contributing to something you want to see.

In Episode Eight, Josh Kopelman of First Round Capital told us angel investing begins as a learning adventure. To succeed, youll need a specialization, and that likely will mean you have unique access to buyers, industry trends or the best founders. As he put it, investors should always question: If Im being offered an opportunity, is it because they think I am the smartest person on the planet, or the dumbest?

In Episode Nine, Linnea Roberts and Ita Ekpoudom of GingerBread Capital told us about the approach theyre developing after their years of investment banking. One element is about picking your team and sticking with those in whom you believe. It started when Roberts contrasted the advancement of women in the finance sector, shy of the highest leadership roles, but saw less of it among founders. It became an investment thesis: To expect a world of more female leadership, they wanted to bet on more female founders. You ought to have your own.

In Episode 10, Tracy Chadwell of 1843 Capital told us that this is a true process. Just as an individual startup investment could have a five-year, or even 10-year, horizon, you must approach your developing an angel investing practice as an investment itself. It will take time. Set a goal of writing one check. De-risk it however you can. Trust yourself.

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One reminder we made every episode is that angel investing is risky. Accredited investors are granted no crystal ball. Even most professional venture capital firms do not generate enough returns to justify their risk. You ought to be getting involved for other reasons than a financial return.

But how do you start? Attend startup pitch events. Buy lunch for an entrepreneur and talk through their worldview and approach. Angela Lees episode is a particularly good beginning, given that she teaches at Columbia University and offers an angel investor bootcamp via her 37 Angels.

With so much less learning available, were happy to offer you a starting point on this road to angel investing.

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Here's what you need to know to start your angel investing career - Technical.ly

February was a chaotic month for equity markets, with the Dow Industrial Average and S&P 500 Index each dropping around 12% in the last week of the month alone. Fears around the coronavirus drove selling, as concerns over the outbreak led investors to seek the relative safety of bonds and other fixed-income investments.

3d illustration of mobile phone over white background with electronic circuit and bank card

Some hedge funds managed to buck the trend. One of these is Clearfield Capital, a New York-based special situations fund started by Phil Hilal in 2015. The $300 million fund was up 7.5% last month thanks in large part to investments in a pair of payment processors, according to an individual with knowledge of the matter. The companies are Paris-based Ingenico Group and Milan-based Nexi S.p.A., which had its initial public offering last year.

Shares of Ingenico, which trades over-the-counter in the U.S. under ticker INGIY, gained about 20% in February, even after dropping from their highs in the sell-off last week. A new management team has accelerated the growth rate of Ingenicos payments-processing business and Clearfield portfolio managers anticipate an eventual divestment of the slower-growth equipment business.

Nexi, which trades on the Milan stock exchange, was up about 10% in February. The Italian company has gained about 75% since its April IPO. Nexi has significant opportunities to optimize its cost structure as well as to acquire Italian assets that would be accretive to its earnings per share, said the person familiar.

Clearfield is now up 12% the first two months of the year, following gains of 35% in 2019. The fund also benefited from a pair of long positions in U.S. stocks this year: TransDigm Group (TDG), a Cleveland-based aerospace components manufacturer, and Motorola Solutions (MSI). It is also short a few names in the industrials sector.

Excerpt from:
Clearfield Capital Hedge Fund Gains 7.5% In February On Investments In European Payment Processors - Forbes

The lithium industry is highly complex, and it needs very deep technical knowledge and huge reserves to try to develop, and this is partly why it has never really got off the ground in Bolivia, said Eileen Gavin.

Making up one third of the so-called lithium triangle, the Andean nation of Bolivia is estimated to have around nine million metric tons of lithium the largest accumulation in the world, according to the US Geological Survey.

Due to the expected exponential growth in demand for battery technology in recent years, of which lithium is a component, interest in Bolivias untapped reserves has skyrocketed. However, unlike neighbouring countries Argentina and Chile, which both have lithium mines in production, efforts to develop these resources have so far amounted to little.

The now exiled former President, Evo Morales, who was a keen proponent of resource nationalism, had tried to kick-start a local lithium industry via a state-owned company and joint partnerships with foreign firms, but he faced public opposition and lack of local expertise. Now he is exiled and elections are planned for May, many are asking whether political stability can be returned to the land-locked South American state and, if so, what approach might Morales successor take to exploiting the countrys lithium riches?

Bolivias abundant lithium reserves are mostly located within the countrys spectacular salt flats, called the Salar de Uyuni. The area, which is popular with tourists, is home to the largest salt flats in the world.

There were plans agreed by a privately-owned German firm called ACI Systems Alemania (ACISA) and Bolivias state-owned lithium company, YLB, to develop a lithium mine in the region. However, these had resulted in widespread protests as locals said the agreement to build a mine, an electric vehicle battery factory and a lithium hydroxide plant did not deliver enough local benefits. Eventually, the project was shelved.

YLB has also signed an agreement with a Chinese consortium, Xinjiang TBEA Group Co Ltd, for a new $2.3bn lithium project. The company, which beat six others to secure the deal, including Irish and Russian firms, intends to produce lithium and other materials from the Coipasa and Pastos Grandes salt flats following feasibility studies.

At the time, Morales said the government had gone with China over the others because the country has the worlds biggest demand for lithium.

However, the deal, inked in February 2019, will likely be subject to the cooperation of the next administration, whoever that may be. And what stance they will take towards development will be key in whether the agreement moves forward or not.

The new interim chief of YLB, Juan Carlos Zuleta, has already said, as reported by Reuters, the firm plans to place strict limits on foreign investment in extraction of lithium.

It is important for the international community to know that Bolivian law says lithium should be extracted and processed by Bolivians, he said in January.

Zuleta also reiterated that the deal with ACISA would remain shelved and the Chinese one is to be reassessed. He added that rather than look to outside expertise, Bolivia would look to strengthen local know-how.

While Morales, like Zuelta, was a proponent of resource nationalism, he was to a lesser extent than other socialists in the region, such as Venezuelas Nicols Maduro, says Eileen Gavin, principal analyst at Verisk Maplecroft

Morales was willing to involve the private sector in participation with the state, that was the idea in 2008 when he set up a state lithium company, she says.

Given the recent protests and with the upcoming elections, its likely the development of lithium will continue to be further politicised and debated. In reality, despite Zueltas statements, what happens next will largely depend on who wins these elections, presuming they are deemed fair and legitimate and are not a catalyst for further political unrest.

Morales Movement for Socialism (MAS), the leading political faction in Bolivia, has two main opponents: Carlos Mesa for the Citizen Community centrist coalition, a former president, and the leader of the civic leaders at the head of Santa Cruz, the traditional right-wing faction, Luis Fernando Camacho Vaca.

Despite MAS being the largest political movement in the country, due to clear signs of public disillusionment with Morales in recent years, the outcome of the election is difficult to predict, says Gavin. However, Carlos Mesa, the centre ground candidate, would probably be the most appealing to foreign investors.

He would be seen by investors as steadier and more investor friendly, says Gavin.

Nevertheless, she adds that, whichever party wins power, they will likely continue to look to China for foreign direct investment rather than the west, because China is already an established source of investment in the region and has a stronger risk appetite.

As well as political wrangling and social opposition to mining, which is par for the course for any Andean country, Bolivias lithium reserves face technical challenges to extraction.

The lithium industry is highly complex, and it needs very deep technical knowledge and huge reserves to try to develop, and this is partly why it has never really got off the ground in Bolivia, says Gavin.

The lithium in Bolivian salt flats is not as dry and contains more magnesium and potassium than in neighbouring Chile and Argentina, which makes the extraction process complicated and costly. Furthermore, the higher rainfall and cooler climate mean the evaporation rate is much slower. Add to this the fact that Bolivia is landlocked and therefore the mineral will be harder to move for export, as well as the ongoing political unrest, its reserves are likely to be deemed much less competitive than neighbouring Chile and Argentina.

For example, in comparison to Bolivia, Chile started exploiting its lithium reserves over 20 years ago, and therefore will be a more obvious and less risky choice for foreign investors.

Chile was seen until recently [the country is facing its own political challenges] as the more stable, investor-friendly country, with up-to-date institutions and mining and legal frameworks; in Bolivia this all needs to be developed, says Gavin.

Yes, the demand for lithium is huge all over the world, but the Bolivian sector poses a huge challenge. While on paper, Bolivia has all this potential, unlocking it and getting it to market will take up to twenty years and require serious private investment, says Gavin.

The world will be watching in May as Bolivians take to the polls. The outcome will be the first step in moving the development of the countrys strategically important lithium reserves to the next stage. But given the technical challenges and strong civil interest, its going to be a challenge for any new government to kick start development while keeping all stakeholders happy.

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Bolivia: will the ousting of Morales open lithium to foreign investment? - Mining Technology

This week as equities markets plummeted across the globe, Bitcoin (BTC) price also faced a sharp correction. Over the past week Bitcoin price has dropped $1,500 and currently trades at $8,454, a new four week low.

Since the start of the year Bitcoin and most major altcoins showed an impressive gain in price, leading analysts to suggest that a bull-run was brewing for 2020, an idea now being challenged by the current pull-back.

As has been the norm, on one side, there are bullish enthusiasts aiming for sky-high valuations; on the other, there are more conservative analysts raising questions about the viability of crypto. The large swings and explosive behavior of the crypto market is what makes them an attractive investment option when compared to other assets but the indecisiveness of the current market is also forcing investors to expand their strategies and adjust them frequently.

Cryptocurrency market weekly overview. Source: Coin360

One strategy based on this underlying rationale is momentum investing. As a refresher: A momentum strategy consists of analyzing daily returns for an asset (e.g. cryptocurrencies, stocks, indexes, etc) and allocating the worst and the best performers into baskets.

The strategy is found to be lucrative in traditional markets where investors buy the best-performing baskets and sell (short) the worst performing baskets or to put simply, they are bullish on the past winners and pessimistic regarding the past losers.

As a variation from the original strategy, an individual asset can be chosen as the best/worst performing asset that day instead of investing in baskets. Following this method, an investor would retrieve daily data for the best and worst performing asset, hold it for 1 day then sell for a profit on the following day.

As previously reported by Cointelegraph, research on cryptocurrency price action found that applying a momentum strategy to the top-20 currencies in the market was profitable if an investor bought the best performing currency instead of the worst performing currency each day.

By expanding the sample to the top-50 currencies in the market, investors can explore even larger swings from lower market-capped coins that can offer investors a higher return but also expose one to a higher risk level.

After identifying the daily winners and losers from the top-50, we assume that an investor holds each crypto for 1 day - buys its closing price that day and sells it the following day at the closing price.

Surprisingly, investors employing this strategy daily from January 1, 2019 to February 23, 2020, would generate a profit instead by buying the worst-performing currency this is opposite to traditional markets. An investor would have achieved a cumulative return of 367% by buying the worst-performing cryptocurrencies (buying the losers) throughout this period.

However, when accounting for a transaction cost of 0.1%, in order to reflect a real investment scenario, the cumulative returns of this strategy are reduced to 284%. On the other side of this strategy, an investor who buys the best performing cryptocurrencies and sells them the following day gets a high negative return for this period - the opposite result to what is found in stocks.

From an annualized Sharpe ratio perspective, meaning, the return an investor gets for its risk exposure, the buying the losers strategy offers a great option as the Sharpe ratio is 1.78 when no transaction costs are considered. When those come into play, naturally, the Sharpe ratio reduces to 1.22. A Sharpe ratio under 1 is considering sub-par, while over 1 it is considered a reasonable outcome.

As seen in the top-20 scenario, Bitcoin, Ether (ETH), XRP, Bitcoin Cash (BCH) and Binance Coin (BNB) rarely appear as the daily worst-performing cryptos. Smaller cryptocurrencies such as Synthetix Network Token (SNX) are very volatile and appeared more than 40 times as the worst and the best-performing crypto on different days.

Additionally, during this period observed, Crypto.com Coin (CRO) and Bitcoin Diamond (BCD) follow as the ones with most negative appearances 32 and 23 times, respectively.

Looking at the first month and a half of 2020, an investor employing the buying the losers strategy during this period would have generated a cumulative return of 160% (no costs) and of 150% when accounting for the aforementioned transaction rate.

From a risk-adjusted performance perspective, buying the losers strategy offers a great alternative for investors with a Sharpe ratio of 3.95 (no transaction costs) and a Sharpe ratio of 3.25 when accounting for the transaction costs.

During the last 7 days of this analysis, to incorporate the recent market reactions, we found that the strategy yielded a very low cumulative return of 0.66% when transaction costs were not considered. When accounting for the transaction rate, the cumulative return becomes negative at -0.74%.

Underlying market shifts like the increasing liquidity of top coins mitigates some of the risks involved with momentum investing. However, as happens with smaller capped cryptocurrencies, liquidity issues may still arise from employing this type of strategy as some of the currencies in the analysis may not generate sufficient buy or sell volume for investors to easily enter and exit positions.

Looking forward, expanding the momentum strategy to the top-50 cryptocurrencies gives investors a greater cumulative return and better risk-adjusted-performance. Moreover, the swings at the start of the year still make an attractive option for the future backed by consistent returns over different periods. However, investors should be aware that the best strategy may vary from time to time and adjust accordingly as we have seen from the last 7 days shift.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin Momentum Investing Does Buy the Dump, Sell the Pump Work? - Cointelegraph

INVEST kickoff 2019

Join us forMedCity INVEST ChicagoApril 21-22 at the Ritz Carlton. Youll hear dozens of healthcare experts discuss the latest investing trends and watch as more than 40 startup finalists screened from a large pool of applicants pitch live on stage to investor judges.

Well be discussing the hottest topics, including:

A panel will spotlight trends in Midwestern innovation from BioEnterprises 2019 Healthcare Growth Capital Report, how startups in the Midwest face unique challenges and opportunities when it comes to attracting growth capital. The panel will discuss future trends impacting investment in this region.

Plus, well feature a reverse pitch, where hospitals state their problems that need solving and startups pitch their answers. See agenda.

Weve extended our early ratetheres still time to save $300 on your ticket. Register by Friday March 6 to save $300. Click here to register.

Over 400 venture capitalists, hospital leaders, influential healthcare execs and tech entrepreneurs attend. Join organizations that include American Medical Association, Arboretum Ventures, Baird Capital, Cultivation Capital, Geisinger Health, Houston Methodist, Mayo Clinic, Providence St. Joseph and many more. Hurry, price goes up soon. Register today.

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MedCity INVEST: Where healthcare startups and investors connect - MedCity News

You have exactly four weeks to finalize your tax-saving investments. In case you forgot, this is the first week of March, and you have to make your investments before 31 March to claim tax deductions on them in this financial year. Oh, we are talking about Section 80C here. As you would know, Section 80C of the Income Tax Act allows tax deductions of up to Rs 1.5 lakh on certain investments. The section offers a wide range of investment options such as Public Provident Fund (PPF) , National Saving Certificate, Equity Linked Saving Scheme (ELSS), five-year tax-saving fixed deposits, just to name a few favorites.

Okay, if you are wondering why we are talking about tax-saving investments in the first week on the last month of the financial year, here is the scoop: many taxpayers love to do the running around to take care of their tax planning only in the last three months for the financial year. A sizable chunk among them love to postpone it to the last month of the financial year. Some tough ones think about it only on the last week.

Yes, it is always better to start your tax planning at the beginning of the financial year. Be it PPF or ELSS, you can invest regularly in them and claim tax deductions on your investments under Section 80C at the end of the financial year. This strategy imparts financial discipline and it will help you to organise your finances better. Also, you would invest the money in the right tax-saving option.

The right tax-saving option is something most taxpayers are always looking for. However, only a few manage to invest in the right one. Most individuals, especially those who wait for the last-minute, often choose the easy option due to paucity of time and inertia. Sometimes, they just choose the one recommended by friends or colleagues. Here is an easy way out. All you need is basic commonsense to crack it.

First, find out how much you need to invest to exhaust the tax deduction limit of Rs 1.5 lakh under Section 80C. Most individuals have an EPF (employee's provident fund) account and life insurance premium that are covered under Section 80C. Deduct the amount from Rs 1.5 lakh to find out how much you need to invest extra to exhaust Section 80C limit. Once you know the figure, we will start the process of choosing the right investment option for you.

Okay, you want to save taxes, but how long do you plan to invest the money? In other words, when do you need the money you are going to invest to claim tax deductions? If you want the money ASAP? Well, you should be prepared to wait at least five years before getting the money. The safest option, the five-year tax-saving bank fixed deposit, has a lock-in period of five years. ELSS or tax-saving mutual funds have a mandatory lock-in period of three years, but you should invest in them only if you have an investment horizon of at least five to seven years.

Also, you should invest in ELSS mutual funds only if you have a high risk appetite. These mutual fund schemes invest mostly in stocks. Equity or stocks have the potential to offer higher returns over a long period, but they can be extremely risky and volatile in the short term. Also, keep in mind that most of the other popular options such as PPF, NSC, and so on are government-backed. Even five-year tax-saving fixed deposits are mostly safe.

If you are planning to invest in ELSS mutual funds to save taxes this year, here are our recommended schemes: Best ELSS funds to save taxes in 2020

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3 easy steps to choose your tax-saving investments this year - Economic Times

Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return for the decade was 250.5%. But theres no question some big-name stocks did much better than others along the way.

One of the market laggards of the past decade was retail giant Target Corporation (NYSE: TGT).

The 2010s were a transformative decade for the retail sector. Amazon.com, Inc. (NASDAQ: AMZN) applied major pressure to a large portion of the sector, and Target was no exception.

Target kicked off the 2010s by announcing its first international expansion into Canada in 2011. It opened its first Canadian stores in March 2013 and eventually grew its Canada presence to 133 stores. Unfortunately, Target Canada was a huge flop and ultimately resulted in $2.1 billion in losses. Target eventually closed and liquidated all of its Canadian stores by the end of 2015.

Targets online expansion was much more successful. In 2017, the company announced Drive Up, a new service that allowed customers to order items online for in-store pickup. In the most recent quarter, Target said online sales were up 31%, while same-store sales growth was 4.5%.

Target shares started the 2010s trading at around $48. By the mid-2011, Target shares had dipped as low as $45.28, a price which would mark its low point of the decade. However, while Target shares held their ground from that point forward, gains were difficult to come by until the past two years.

Target climbed as high as $85.81 in mid-2015 on the home that the company was finally moving beyond its Canada debacle. Unfortunately, slumping same-store sales and heavy investing in online sales and in-store pickup dragged the stock back down to as low as $48.56 in mid-2017. Target finally broke out to new highs in late 2018, reaching $90.39 before another steep correction pulled the stock back down to $60.15 by years end.

Target once again broke out to new highs in mid 2019 and made it as high as $130.24 by the end of the decade.

Target has since pulled back to around $102 following the coronavirus outbreak, and the stock was a bit of a disappointment for investors in the past decade. In fact, $100 worth of Target stock in 2010 would be worth about $263 today, assuming reinvested dividends.

Looking ahead, analysts expect a big year from Target in 2020. The average price target among the 26 analysts covering the stock is $136, suggesting 33.4% upside from current levels.

Related Links:

Here's How Much Investing $100 In Macy's Stock Back In 2010 Would Be Worth Today

8 Retail Stocks To Put In Your Cart

2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Here's How Much Investing $100 In Target Stock Back In 2010 Would Be Worth Today - Benzinga

The global march toward cannabis legalization has seemingly awoken another long dormant area of scientific interest: psychedelics as medicine. While the idea of using LSD, MDMA, andpsilocybin (the main hallucinogenic compound in magic mushrooms) to treat mental health disorders is far from a trail-blazing concept, this whole area of research had been off limits for the better part of the last 50 years. Then, something strange happened.

In 2018, the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy designation (BTD) toCompass Pathways'psilocybin therapy for treatment-resistant depression. A few months later, the agency awarded BTD for Usona Institute'spsilocybin therapy for major depressive disorder.In lockstep with the FDA's more open-minded approach towardpsychedelic medicine, Denver, Oakland, and Santa Cruz all decided to decriminalize magic mushrooms. Hundreds of other U.S. cities are reportedly considering similar measures at the moment.

Image Source: Getty Images.

This renewed interest in psychedelics is being sparked by a pair of seemingly unrelated events. First up, cannabis has now been scientifically validated as a treatment for two severe forms of childhood epilepsy (more on this in a moment). These pioneering efforts with cannabis as medicine, in turn, have inspired researchers to take a second look at other controversial compounds like psilocybin.

The second driver is Johnson & Johnson's (NYSE:JNJ) groundbreaking work with the ketamine-derived medicineSpravato. In March 2019, J&J's hard work paid off when the FDA approved Spravato for treatment-resistant depression. This landmark approval is unique in that ketamine is well known to havehallucinogenic properties, as well as a long history as a party drug.

What's important to understand is that a paradigm shift is starting to taking shape within the Western medical community. In effect, scientists are increasingly intrigued by the therapeutic potential of psychedelics as treatments for a whole range of mental health disorders. Pyschedelic medicine thus has the potential to be a gold mine for early investors.

Psychedelic medicine offers investors several key advantages over legal cannabis. First and foremost, there will be considerably less competition in this emerging space, thanks to the stringent scientific, logistical, and regulatory barriers involved.Keeping with this theme, J&J'sSpravato has to be administeredunder the direct supervision of a healthcare provider. All psychedelic therapies are likely to be administered in the same manner. That's a level of administrative control that simply doesn't exist for medical cannabis.

In addition, psychedelic therapies will probably sport markedly stronger intellectual property rights than most medical cannabis products.This built-in economic moat should translate into steady levels of revenue growth for the industry -- a key feature that is currently lacking in the legal cannabis space because of the lack of a viable competitive moat.

What's the risk? Any approved medicines will have to be rescheduled by theDrug Enforcement Administration (DEA). Right now, almost all psychedelics are listed as Schedule I drugs, meaning they have no currently accepted medical use and are considered to have a high potential for abuse.

Fortunately, this issue shouldn't be a show-stopper. Back in 2018, the DEArescheduledGW Pharmaceuticals' (NASDAQ:GWPH)cannabis-based epilepsy medicine, Epidiolex, following its regulatory approval by the FDA. So, there's no overarching reason to think psychedelics can't be handled in the same manner, especially if a drug successfully completes a rigorous clinical trial program.

This flurry of clinical activity and growing public interest in pyschedelic medicine is expected to spark a handful of initial public offerings (IPOs) soon. Here is a list of the companies known to be considering an IPO.

Mind Medicine is reportedly considering an IPO on Toronto's NEO Exchange in early March. The IPO would take place via a reverse takeover under the ticker MMED. Mind Medicine lists former Canopy Growth(NYSE:CGC) co-CEO Bruce Linton as a director, as well as Shark Tank's Kevin O'Leary as an investor.

Compass Pathways is also mulling over the public option. One of the company's main financial backers, biotech building company Atai Life Sciences, has reportedly spoken to multiple financial institutions about an IPO for Compass. Atai is seeking an $800 million capitalization for Compass upon its public debut, presumably on a Canadian stock exchange.

Field Trip Ventures is a Canadian venture capital fund that funds research into psychedelic medicines. The company has stated that it might consider going public sometime soon, but it may also decide to remain private for the time being because of the nascent stage of the industry.

Buying psychedelic medicine stocks during the first wave of IPOs is a risky proposition, to be sure. But the upside potential is undoubtedly immense. Any novel drugs approved for hard-to-treat forms of depression will have megablockbuster sales potential, with annual sales topping $5 billion. In that event, a Compass Pathway IPO, even at an initial market cap of $800 million, would probably look like an incredible bargain in hindsight.

The IPOs of Canopy Growth and GW Pharmaceuticals illustrate this point nicely. In brief, Canopy Growth and GW Pharmaceuticals both delivered 1,000% plus returns for investors that bought their IPOs. Psychedelic medicine stocks, though, may eclipse even these stately returns, thanks to their inherent competitive advantages over the struggling legal marijuana industry.

See the rest here:
Forget Cannabis: Psychedelic Medicine Is the Better Investing Opportunity - The Motley Fool

In this week's Industry Focus: Wild Card Wednesday, Emily Flippen talks with Matt Anderson from Vanguard Scientific. This show was prerecorded in December at MJBizCon, the world's biggest conference for the cannabis industry. Matt talks about his history in the regulated-products market, why marijuana is a lot like the oil we put in our cars, what investors need to know about buying into the market now that it's dropped so harshly from its highs, how the marijuana industry might handle vertical integration, and more.

To catch full episodes of all The Motley Fool's free podcasts, check out ourpodcast center. To get started investing, check out ourquick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Dec. 11, 2019.

Emily Flippen:It's Wednesday, Jan. 29, and I'm your host, Emily Flippen. For this week's Wildcard Wednesday, we're going back in time a little bit, back to Dec. 11, 2019, when we traveled out to Las Vegas for cannabis convention MJBizCon. While our team was out there covering the cannabis industry, we had the opportunity to sit down and chat with one industry insider himself, Matt Anderson.

Now, before we dive into our interview, I want to give listeners a quick overview of the cannabis industry to the extent that I can. We hear a lot about investing in pot stocks, especially in the news, and the volatility that comes with it. But it's important to understand the industry dynamics for the cannabis industry. They're completely different than any other industry you may be investing in. For those who aren't aware, marijuana, both medical and recreational, is legal in Canada, as well as 11 states across the U.S. Hemp was legalized across the U.S. in 2018, and it's not the same thing as marijuana. Hemp is derived from the same cannabis plant that marijuana is, but it doesn't contain any of the psychoactive substances -- that's THC. CBD is a chemical that can be derived from hemp, and the sale of hemp-derived CBD topicals is legal nationwide.

So, having covered our bases there, the opening of the cannabis industry has opened up a whole new part of the equity markets. A lot of investors have lost their shirts investing in the cannabis space, while others still see the long-term potential. We sat down with Matt and we talked about his business, the state of the cannabis industry today, and what he sees for cannabis investors in the future. We hope you enjoy the interview!

Matt, thanks for sitting down with us today and talking. We're here at MJBizCon, which is the largest cannabis conference for professionals in the world. Yet there are still a lot of investors and a lot of listeners out there who have no idea about what investing in cannabis even means. You have been around the block yourself, to say the least, in the cannabis space, so I'd love to hear a little bit more about your background, your history, and how you got started in cannabis.

Matt Anderson: So it's dangerous, right, to say you've been around the block in the cannabis industry. My background's actually in regulated products. When I was 21, I built a distillery in my garage and made bathtub gin. Fast-forward seven years, we had two distilleries built in the United States and we were distributed in 17 states. Coming out of the alcohol space in 2015, I joined the regulated environment in Florida, actually for Senate Bill 1030, which was high CBD, it was called the Charlotte's Web Initiative. And I really got to see the difference between luxury or alcohol products to a real health-controlled product like a cannabinoid. And from that, the industry has just blown up, right? It's been something that's had conversations touching medicine, therapeutics, all the way to recreational and consumer dollars. So, for investors looking in the space, they've been able to find a niche, but then trying to quantify what that niche opportunity means has been, let's just say, less than straightforward.

Flippen: Your role now, you are now the CEO of Vanguard Scientific, which is an extraction company. I know a lot of listeners out there were probably confused by a lot of the words -- not only extraction, but cannabinoid, even. So maybe give us a baseline. What do you do now?

Anderson:Yeah, sure. We're actually technology integrators, but, extraction company, sure. Let's use oil and gas for comparison. The oil that you pull out of the ground isn't the same E-85 that you put in your gas tank. There's about nine to 10 different pieces of equipment, and then a number of specialized different steps that take, to actually be able to consistently produce that final oil product. The same is exactly true for this industry. Whether you're looking to produce a full-spectrum oil for a therapeutics product, or you want to get a distillate or isolated cannabinoid product for pharmaceutical off-take, there's different equipment, different processes, and different regulatory hurdles that are needed in order to be followed and compliant do so. What we do is, we work with our clients in a sole source relationship. So we'll show up and become consultant advisors. We'll help them procure their equipment to meet their needs. Our company's technology agnostic, so we represent the best extraction companies on the floor today. And then, we help them understand knowledge, technology, and methodology so they can actually produce compliant ingredients to get to the final market.

Flippen:I love that analogy you used about the gas you're pulling out of the ground not necessarily being the same thing that you put in your car. Obviously, your company now is great kind of a middleman in that process. I'll continue the analogy. You have upstream, midstream, and downstream in the energy sector. In the cannabis sector, it can be the same, right? You have people who are growing their product, people like yourself who are working in the middle, transforming what you pull out of the ground into something like oil. And then, you have people who are maybe taking that and then putting labels on it and selling it to the end consumer there. So it's a really great analogy, and there's lots of interesting, investable companies at every point along the space. But the equity markets now, they've been really depressed. Maybe talk to us about what we're seeing today that's impacting the equity markets, both in Canada and the U.S.

Anderson:Look, I think that what's happened in this over 60% retrenchment of the Canadian markets was probably the best thing or the most healthy thing that could have happened to the industry. For better or for worse, we've had very comfortable legal firms and very comfortable NYMEX or CSEX marketplaces that were enabling pre-revenue companies to justify large valuations.

For sophisticated investors, they kind of saw it coming. Quarterly reports were coming, and without real revenues or real assets, you were selling on an opportunity of a value creation. So we saw that happening in the United States. But at the same time, some of the more sophisticated private equity groups in the United States began to aggregate dollars and then bet on real revenue, and bet on, let's say, horses that could run. Vanguard, for instance, we're eight quarters of on-target earnings, and we've really focused on returning that investor experience.

This is going to be the largest economy in the United States and the world. Dow Chemicalhave released a small press release that said by 2025 that hemp might actually be larger than soy production globally. So when you start thinking about what the actual cannabinoids can do, and then the actual plant itself below the flower, we're starting to talk about addressing plastics and biofuels, right? Pain management. I think the number we quoted was something like a $2.6 trillion investable or addressable market that's capable.

So the equity markets themselves, what they've done is, they've said, "Look, you can't bet the widget and expect the horse to come in. You have to do your diligence. You've got to look at a run rate. You've got to look at the fitness of a company. And just like any other industry, you have to use some standards before you place capital."

Flippen:Now that the valuations we've seen in the public market have come back down to a reasonable basis, it really gives investors something to start working off here. What do you see as being the biggest headwinds and the biggest tailwinds for cannabis companies today?

Anderson:Wow, that's a great question. I think that companies that have published forward-looking perspectives that haven't recalibrated or haven't had a chance to readdress what they've promised are in a tough position. I've seen some of the best companies, no matter how big they are, print reactionary statements saying, "Look, given the circumstances in the environment, here's now our recast." Those are things that I really look for and appreciate in leadership teams.

Yeah, they take a haircut in upfront valuation, but they're finally putting a barrier, or I should say a hurdle rate out there, that they'll actually be able to hit, versus getting ready to let their investors down again. So I think that's probably a very large headwind opportunity. Folks that have gone heavy on the wrong infrastructure, that have invested in the wrong part of the supply chain, one would argue it's time to recap those companies' bets and start over.

Flippen: In terms of tailwinds, for Vanguard Scientific, what do you think is catalyzing the industry moving forward? Is there any reason why retail investors should be involved in the cannabis industry today?

Anderson:Yeah, without a shadow of a doubt. I think that the regulatory hurdles overall create the market opportunity. In any sort of industry that has hurdles or barriers to entry, what you see is market opportunity for those companies or performers that have the fitness level to compete. So, not everybody has a chance to be on the Walgreensshelf, but boy, oh boy, once that product hits the shelf, they're in 100 stores worldwide.

So, kind of looking at that analogy, for those operating teams and those companies that have a strong value proposition -- and I'd say Vanguard definitely is one of those companies -- what we're doing is promising our investors stabilized returns. We're looking to smooth out the return narrative while we're aggressively asking them to invest in audacious reaches for us to continue to expand our business model.

Flippen:Now, as somebody who is operating in that midsection of the market, I'd be remiss if I didn't ask you about vertical integration. It's a fancy word to just say that there are a lot of companies out there that are making the decision, whether that be because of their own personal beliefs about the market or regulatory requirements, to own every aspect of the value proposition in the cannabis sector. So they're owning the seed to sale experience, producing it, extracting it, changing it, labeling products, doing it all themselves, getting to consumers. Obviously, that is not your business right now. How do you feel about the future of vertical integration?

Anderson:Great question. You go back to business school; you've got two paradigms. One's buy versus build. Can you be great at everything? Are you an expert at every step of that value chain? And then you start setting things, supply chain integration, right? And that doesn't say vertical supply chain. I'm not saying I own it all. But what it does mean is, I do have a tight relationship, right? I'm hardwired and understanding, in which I know tolerances, plus and minus a value across the supply chain, so I can do what is the most important part, and that's promise consistency in the final product.

So I think some of the companies that are doing it the best aren't necessarily coming in and saying, "I have to own the company because I want to justify on my balance sheet that I've got the value creation," but they've come in and invested in this supply chain infrastructure because they have the need to guarantee that final product. So I think it's supply chain integration versus vertical integration for the win.

Flippen: Matt, thank you so much for talking with us here at MJBizCon. It's been an absolute pleasure.

Anderson:Yeah, thank you and thank The Motley Fool!

Flippen:As always, people on the program may have interest in companies discussed on the show, and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don't buy or sell anything based solely on what you hear. Thanks to Austin Morgan for his work behind the glass today. I'm Emily Flippen. Thanks for listening, and Fool on!

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Interview: The Future of Cannabis Investing - The Motley Fool

STATEN ISLAND, N.Y. -- After a $700 million investment and the creation of at least 4,200 permanent jobs, the developer of Matrix Global Logistics Park -- which houses Amazon and Ikea facilities -- is looking to lease the last of four warehouses on its 200-acre Bloomfield site.

The project represents one of the largest industrial property investments in the borough, and was built within five years without any major stops or delays.

This project has created a significant number of jobs,'' said Borough President James Oddo, noting that in addition to full- and part-time positions, thousands of construction jobs have been created during the course of the project. "It is the biggest bonanza of jobs that weve seen in this borough in a long time.

The Cranbury, N.J.-based Matrix Development Group is currently seeking to lease the last 975,000-square-foot structure on the property, said Joseph Taylor, company CEO.

Our last building of about 975,000 square feet is about half finished, he said. Its a speculative building [which means] we dont have a tenant for it yet. But thats how we did the other three. Wed love to have another warehouse user, like Ikea and Amazon, here.

Once the final building is leased, Taylor said the company would like to invest further in the borough and has been looking for additional property.

We have been looking around at a number of different sites,'' he said. "We havent settled on any one site.

SITE HISTORY

Matrix Development Group broke ground on the logistics park in late fall 2016.

First to be built and occupied was a 855,000-square-foot warehouse, which is now home to Amazons $100 million Fulfillment Center, which opened in 2017. That facility employs more then 4,000 people who work alongside robots to pick, pack and ship customer orders that are delivered to various geographic areas.

Another 975,000-square-foot facility is occupied by Ikea, which opened in 2018. The Staten Island unit supports delivery to many customers in New York City, whether they are shopping in store, at the IKEA Planning Studio or online. The Advance has previously reported that about 200 people are employed at the facility.

Recently leased to Amazon by Matrix was a new 450,000-square-foot warehouse to be used as a delivery station that will help speed up deliveries to local residents. The new warehouse will have a different use than the existing Staten Island Amazon facility. It will be for last mile deliveries," which means packages from the facility will go to a specific geographic areas in New York City.

Part of the success of the site is that Matrix was able to have MTA buses stop on the property to get employees to and from work, said Taylor.

Included in the $700 million investment is $25 million used for road improvements on and around the site, which included making Gulf Avenue a one-way street, he said.

Matrix Development Group has been in existence for 35 years, and its portfolio of industrial properties boasts some as large as 40 million square feet throughout New York, New Jersey and Pennsylvania. The company also has an extensive portfolio of office and residential properties.

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A $700M investment, 4,200 jobs; Matrix now building 4th warehouse - SILive.com