Since launching in 2014, Seattle-based SinglePoint has grown from a full-service mobile technology firm into a diversified public holding company.
With a portfolio that includes payment solutions, ancillary cannabis services and blockchain technology, the company began trading on the over-the-counter market earlier this year under the ticker symbol SING.
As the firm sets out to expand, its sights are set on beefing up its portfolio of ancillary cannabis ventures, said Wil Ralston, the firm’s president.
“We research opportunities where we can be active within the company and influence strategy and direction,” he said.
What’s the best cannabis investment you’ve made and why?
Discount Indoor Garden Supply, for a couple reasons. The relationship has provided SinglePoint a foothold in California, where the company is located, and given us access not only to work with cultivators but also to supply consumer products. It’s really a nice range of customers that we have, anywhere from cultivation operations, to dispensaries, to individual customers ordering products online. It’s also opened the door for us to develop a wide range of products from hemp-based CBD, including capsules, tinctures, beverages and other consumption methods.
The other important benefit of our acquisition of this company is that it has brought us a lot of strategic relationships and added a lot of expertise from within the cannabis industry that we didn’t have.
What attracted you to these marijuana-related companies and opportunities?
One of the primary things that attracted us was a market worth $5 billion and projections up to $50 billion. There was just a massive hypergrowth opportunity within the industry, so we were looking to invest in smaller- to medium-sized businesses, help them with the growth capital they need to be a part of that boom.
What’s your biggest investment mistake, and how did you overcome it?
As a public company, we have to do a lot of research and due diligence before making an investment and simply can’t afford to make mistakes.
If we see something problematic, we have to end that deal. One of the most important steps in the process is to make sure that company’s financials are in order and can be audited. We’ve attempted to make deals with companies in the past that we were really excited about and that seemed to have a great opportunity ahead of them. But once we got into it, we realized that there was no organization and the financials were a mess, which ended up being a waste of time that could have been used pursuing better opportunities.
What’s your top tip for judging the credibility of valuations?
For us, right, wrong or indifferent, we have to get a third party to sign off on it and say, “Yes, this company is worth $50 million,” or whatever the number may be, because any regulating body could ask us how we came up with this number. We have an “out” from that perspective.
My top tip would be to find what appears to be a comparable company – whether it’s within the industry or if you have to branch out a bit. If a similar company in another industry is worth $20 million, and you consider that cannabis is new and hot, you can add a couple more multiples to the valuation of the business you’re looking to acquire. And if it can be determined by revenues, then you can just place multiples on those, which is clearly more straightforward.
What products or sector are you most excited about?
We’re excited about the CBD market, and there are some new game-changing technologies in the (CBD) biotech space that we’re excited about. Another vertical that excites us is the implementation of technology such as (seed-to-sale) tracking through the blockchain. There’s a marriage and crossover between some of the supply-chain functionality and tracking that blockchain can create to make it easier for cultivators all the way to consumers to know how, where and when products were sold, created and everything else.
What’s one of your top investment goals in the next year?
We want to acquire a company that has anywhere from $10 million to $15 million in revenue and hopefully doing $500,000 to $1 million in EBITDA. Our focus is all on ancillary markets – lighting supplies, materials for cultivation buildouts and really all the ancillary things that it might take to run a cultivation operation. We’re looking to acquire companies that are well established in that space.
This interview has been edited for length and clarity.
