Distru, a nearly three-year-old, Oakland-based startup whose platform aims to help track cannabis through its seed-to-sale process, has raised $3 million in seed funding led by Felicis Ventures, with participation from Village Global, Global Founders Capital, and numerous notable angel investors, including Elad Gil, Katie Stanton, and Avichal Garg.
The deal is an interesting one for numerous reasons, including that it marks Felicis’s first investment in the cannabis space after many months spent looking at a wide array of related startups, says Niki Pezeshki, a principal with the firm. Indeed, though interest in cannabis-related products and services is growing among traditional venture firms as a growing number of states move to legalize and regulate marijuana, there’s lingering concern about what will happen and when at the federal level. (Pezeshki also suggests there’s still a level of immaturity with some of the startups Felicis has seen and that Distru stood out among them for having its act buttoned down.)
Distru is also entering into a space that tech investors can grok: it’s a software as a service company, one that just happens to give cannabis operators insight into their inventory and order management, their customer relationship management, and their logistics. Most important, Distru’s software helps them automate compliance with complicated and growing state regulations by integrating with Metrc, which is itself inventory tracing software that’s being used by a growing number of states to record the inventory and movement of cannabis and cannabis products through the commercial supply chain. (We wrote about six-year-old Metrc last year when it raised $50 million in funding, including from Casa Verde Capital and Tiger Global Management.)
Not last, Distru’s team, headed by founder and CEO Blaine Hatab has spent much of his post-collegiate career as a software developer, as has his cofounder, Blake Gentry, who joined forced with Hatab after leaving a developer role with the startup Opendoor to create his own company, Actualyze, which merged with Distru last fall. The same is true of a third cofounder, Johnny Li, who further serves as Distru’s chief technical officer. Altogether, says Hatab, the team is made up of just seven employees who work remotely, though with its new funding, Distru plans to fill five more roles imminently.
In the meantime, it seems to pick picking up momentum despite its scale. Among its customers are major cannabis producers and distributors Humboldt Farms and CannaCraft. Distru’s platform, and though it has competitors, including nine-year-old, Denver-based, venture-backed MJ Freeway, Hatab says it’s growing steadily through word of mouth alone. It’s obviously operating in a highly nascent market. Perhaps most compelling to Felicis and its other backers, the company has been operating in the black for some time. Says Hatab, “I think [our investors] were surprised by profitable we were.”
Distru operates in California alone today, but Hatab says it plans to follow Metrc into other markets, including roughly a dozen other states that include Colorado, Oregon, Alaska, Maryland, Michigan, Ohio, Massachusetts, Montana, Nevada and Louisiana.
