Q&A with the co-founder and chief investment officer of Tuatara Capital
By Omar Sacirbey
After earning his law and business degrees from Arizona State University, Al Foreman took a conventional route into the financial world. Foreman first joined Citigroup as a management associate and ultimately co-founded the Professional Sports Group. He then spent time at a financial services software company before joining J.P. Morgan, where he became a senior investment banker.
In 2014, Foreman co-founded Tuatara Capital, a cannabis-focused private equity firm where he is responsible for formulating macro-investment strategy and structuring the firm’s investment portfolio. New York-based Tuatara closed a $93 million raise in August 2016 – a record in the marijuana industry at the time – and since then has focused on deploying that capital. To date, the firm has raised $108 million.
What is the best cannabis investment you’ve made?
Given the breadth of potential outcomes for how the cannabis industry could unfold, I think it would be unwise for me to try and single out any one investment as the best. But the common characteristics that Tuatara seeks in our investments – scalable concepts, leading scientific methods, brands with broad consumer appeal and strong management teams – we think are germane to every successful cannabis investment.
What is the biggest cannabis investment mistake you’ve made, and how did you correct it?
In our early days of the capital planning process with our portfolio companies we underestimated upfront capital requirements. It takes having some experience in the cannabis industry to really understand the uniqueness of operating in such a complex business environment where you can’t control exigent factors – state regulatory agencies, landlords, neighbors, financial services support, customs policies, etc. – that directly impact timelines and costs.
For legal cannabis companies, getting things done generally takes longer and costs more than in other comparable industries.
In the situation I referenced earlier we were able to address this specific planning challenge by providing a follow-on investment to support the company’s ongoing growth plan.
What is the best investing tip you can share with investors?
Simple: Investors actually need to do their diligence.
Diligence is what you learn about a potential investment that isn’t provided to you by the company seeking capital, and it matters. Investors should carefully diligence the market in question, the business assumptions provided and, most importantly, the people.
What sector, product, state or trend are you most excited about and why?
We have been and are still excited about brands that are scalable and can appeal to a broad consumer audience. The bigger the industry becomes, the more important brands will become. Consumers who are currently outside of the category who want to experience cannabis will need an entry point that’s safe, welcoming and accessible to people unfamiliar with the plant.
What is your top goal for the coming year?
Our primary goal is to continue our mission of assembling the highest-quality management teams and cannabis companies in our portfolio. If our current trajectory continues as planned, we would also expect that Tuatara will launch fundraising for our second fund in 2018.
