At $102 million, Intrinsic Capital Partners has closed a growth equity fund for investment in cannabis- and hemp-focused life science and technology businesses.
With an overall aim “to build and scale industry-leading companies that address unmet needs across the supply chain,” according to a press release, Intrinsic hopes to do just that here. A team of operating advisors will work to build and scale Intrinsic’s portfolio companies, which so far include ACT Laboratories, Treez, Hound Labs and Elemental Brands. The Pennsylvania-based firm has committed $65 million to these four companies and anticipates directing dollars from the fund to two or three more businesses.
Intrinsic lists four members of its advisory group in the release, all of whom have ties to Johnson & Johnson included in their credentials (as does Cornelius Merlini, one of Intrinsic’s three co-founders and partners). One advisor, Minnie Baylor-Henry, was formerly director of the U.S. Food and Drug Administration’s (FDA’s) Division of Drug Marketing, Advertising, and Communications (DDMAC), the precursor to the federal agency’s Office of Prescription Drug Promotion (OPDP).
Merlini, who before co-founding Intrinsic most recently worked at Endo Pharmaceuticals’ Healthtronics Lab Solutions division, said in the release, “[W]e built a top team of advisors who have scaled valuable businesses and are able to provide our portfolio companies with strategic advice, mentoring, operational support and regulatory know-how.”
Acknowledging that much of the capital invested in the cannabis space has gone to state-legal cultivators, dispensaries and adult-use brands, Intrinsic’s team is focused on investment in ancillary businesses that support the cannabis and hemp markets.
“This is a unique and opportune time for a fund with dry powder to invest in market segments where traditional capital providers and strategic corporations have largely stayed on the sideline, creating price dislocation, attractive private market valuations and ample exit strategies,” said founder and partner Gerald Stahlecker, former president of FS Investment Corporation and executive vice president of FS Investments.
The portfolio companies’ products and services vary, from Hound Labs’ cannabis breathalyzer to Treez’ point-of-sale (POS) system and ACT’s cannabis testing.
Intrinsic’s third partner and founder, Dr. Howard Goodwin, M.D., said the growth of the cannabis and hemp industries represent “a multi-decade secular trend” and “a rare opportunity to invest in a space where there’s tremendous underlying demand, a strong industry-wide growth profile and scarcity of capital.”