A former executive at computer chip giant Intel, Kim Rael also has a deep background in technology startups. She co-founded the energy company Qynergy and was looking for a new opportunity when a chance invitation to test a cannabis syrup led to her next big idea: Azuca, a New York company that makes fast-acting THC and CBD food ingredients such as sugars and syrups.
Rael spoke with Marijuana Business Magazine to share her startup expertise with the cannabis sector.
How did you identify this business opportunity in the cannabis sector? What was your “aha” moment?
I’m sort of an accidental cannabis entrepreneur. I was asked by a classmate from business school to sample products about a year ago as part of a focus group and to test the infused sugars. My classmate had a background in startups. He introduced me to this new business.
I’m a fairly straight-laced MBA with my spreadsheets. I was terrified.
I wasn’t a cannabis user, but I sampled the product on a Sunday morning, put the sugar in my coffee. It just blew me away. It was like a couple glasses of wine without the depressive aspects of wine.
I was thinking, “This is going to be a killer product. It’s like having a couple glasses of wine with 90% fewer calories. Women are going to love this.”
I’d been working in tech and venture capital for 20 years, and I wanted my next startup to be in health and wellness. Now I’m the CEO, and it’s my company.
What skills from other startups do you apply to the cannabis space?
I’ve done dozens of startups—as a board member, as an investor and as a founder.
The absolute No. 1 thing is choosing the right team. Surrounding yourself with people who are complementary, not just like you.
You’re going to have challenges in the startup world. You’re going to disagree. You want to have an alignment, a shared sense of, “Why are we doing this?”
How do you find those folks?
Personal networks are the most important thing.
Networking, going to events and following different industry associations are really important.
We all win together.
What common startup challenges really hit hard in cannabis?
Every startup I’ve ever worked with had a real issue with capital—raising capital, keeping enough capital, running out of capital, managing their capital.
You’ve got to be especially smart about that in this industry. For all the buzz of people throwing money at this business, it’s really a very narrow segment of the investor community that will even look sideways at this sector, much less write a meaningful check.
So, the capital strategy is really, really important for startups in this business.
How do you raise capital in this tough industry?
It goes back to the network and having a credible story—and the foundation of a credible team to execute on your opportunity.
Look for people who have invested in cannabis before. Don’t try to reinvent the wheel; find someone who’s already enthusiastic about this sector.
This interview has been edited for length and clarity.