The Marijuana Industry is Ripe For Inventors  

The Marijuana Industry is Ripe For Inventors  

GETTY IMAGES

According to research published this spring, the global market for legal marijuana products is predicted to reach $66 billion by the end of 2025. Wow. That is wild. Savvy entrepreneurs and inventors have taken notice.

As a person who loves new products and has a background in the packaging industry, I’ve been watching the development of the cannabis industry with great interest. Recently, students of my coaching program InventRight who are pursuing licensing agreements for their cannabis-related products have told me they’re being embraced with open arms. In terms of obtaining patent protection, the industry is so new that there isn’t much prior art to overcome, which is exciting. Because there are so many avenues for these companies to pursue and only so much time, your product must offer a persuasive benefit.

To find out more about the popularity of open innovation among marijuana businesses, I interviewed Arkady Grigoryan, an InventRight student who recently signed a licensing agreement for his pre-roll packaging solution. Because it concerns pre-rolled joints, he expects it to roll out to the two other major markets for pre-rolls, which are cigars and cigarettes. The big benefits of his invention, the RoachPack, are that it is child resistant and allows the smoker to store what’s left of their joint in the same package.

“I was inspired by a problem I came across,” Grigoryan explained. “You could say I’m a clean freak. When I quit cigarettes and started smoking marijuana, I realized that you don’t really finish an entire marijuana joint, but there was really no good way of storing it for later use.”

So Grigoryan began developing a solution. The first prototype he made and patented turned out not to be manufacturable, prompting him to hire a firm to help with reengineering. At the firm, he befriended an employee named Jonas Matossian. Like me, Matossian started his career in the toy, game, collectibles, and novelty gift industries doing product development. During his career — which includes spending 11 years in China overseeing prototyping and manufacturing from ground zero — he estimated he has worked with hundreds of inventors.

“We always cast nets out. Our philosophy was, we want your invention ideas, so bring them to us first,” Matossian told me in a phone interview.

When Matossian switched gears and began working in the cannabis industry a year ago, he brought the same philosophy with him. This fall, he became the director of strategic development for the new cannabis sector of GPA, the global packaging company known for doing design, engineering, and manufacturing in-house. Since it was founded in 2007, GPA has worked with major brands including Case-Mate, Ring, Skullcandy, and Costco.

After observing that the cannabis industry was exploding, Matossian was inspired to start developing his own designs for child-resistant packaging for cannabis products. He knew that beginning in 2020, for example, all cannabis packaging in California would be required to be child resistant. After Matossian met and pitched his concepts to the CEO and president of GPA, he was offered the opportunity to take on a new role.

“GPA wants new innovative ideas and charged me with bringing new child-resistant products to the table,” he explained. “The first person I thought of was Grigoryan, having developed his prototype [for a new type of child-resistant pre-roll packaging] in a previous role. I also genuinely believed in his product as a solution.”

The RoachPack solves the problem of what to do with the remains of a half-consumed pre-roll using an internal compartment that is airtight and keeps ash debris separate from what’s left of the joint. This way, it stays “as fresh as it can be,” Matossian told me. When the smoker has finished the joint, the RoachPack also functions as a trash receptacle.

When Matossian brought the RoachPack to GPA, negotiations moved quickly — largely in part because Grigoryan had already had his design certified as child resistant. Next week, GPA will launch the RoachPack at the Marijuana Business Conference and Cannabis Expo in Las Vegas. It can be made using a range of different materials, including sustainable packaging, and is rolling out in dispensaries over the next few months.

In an interview, Matossian reflected on the benefits of open innovation, the opportunity for creatives in the cannabis industry, and what he wants to see from inventors.

You’ve worked with independent designers in the past, and now your new position at GPA is to work with inventors, to look for the most innovative ideas. 

Matossian: Absolutely. That’s the most fun part of the job for me. When you’re trying to develop something new every day, sometimes you lose focus on what else is out there. I’ve always thought that working with inventors would bring some fresh perspective, and, so far, it has. GPA prides itself on working closely with its clients to help make their products better. To get that secondary perspective on what the market needs as well? In my opinion, that’s invaluable.

I believe in creating relationships with new people so we can bring new products to market that add to our offerings. I don’t see this as a bad thing whatsoever. I would actually like for us to be the first stop for inventors who have a new packaging solution for the cannabis industry. The worst we can say is no and maybe point them in the right direction. And the best-case scenario is that we license the product from them, and hopefully we’re both successful with it.

What do you prefer to see when someone is submitting an idea? A prototype, a sell sheet, a video? 

I always love to see a prototype or a works-like, looks-like type of model to truly convey the image of the product. But there have been instances in the past where I’ve worked with inventors when their ideas were just a sketch on a napkin. We would develop the product on the basis of the concept, invest in it to bring it to market, and do all the marketing behind it.

To answer your question, I prefer to see a physical, works-like, looks-like model or prototype, but a video, a deck, anything will suffice as long as it conveys the image and maintains alignment with where we’re going as a company as far as packaging. We’re happy to work with whatever, see whatever.

When a product comes in, how long does it take for you to get back to that inventor with a yes or no? 

Well, for the RoachPack, the licensing agreement was signed within five weeks. So, not too terrible.

Yeah. Tell that to the inventors, though. They think it’s really slow.

How important is cost when evaluating an idea?

Cost is always crucial. But the good thing about the cannabis industry and packaging is that the value of the product offsets a lot of the packaging costs, in my experience. For example, when a package of pre-rolled marijuana cigarettes sells for $40, you’re not going to balk at a $1 or a $2 price tag on a package that functions the way you want it to and is child-resistant certified.

We’ve noticed in cannabis that there’s less resistance to cost, but as the market’s becoming more saturated, people are getting more price-oriented. At GPA, we have solutions for every price point. We can make a package as fancy as the client wants, or we can make it as low-key and simple as they want. Our primary concern is the child-resistant function. How do we make that better and keep expanding on it and taking it to the next level? I think inventors will play a key role in that.

How important is intellectual property?

Very. It’s highly important to me. I’ve come up with products that I shopped around to contract manufacturers and then saw on a store shelf. It’s highly frustrating. What can you really do about it, if you’re not protected? Some of these inventors, they can’t invest tens of thousands of dollars to get patents and do child-resistant testing. The good thing about GPA is that if we believe in the product and it’s a great item, we do have the backing to do that. Meaning, we can protect the inventor and the company.

A big part of how Grigoryan got a licensing agreement signed for the RoachPack (keeping in mind that this is kind of a new way of doing business for the company) is because he did make those investments with his own money. He did get his patent protection. He did get his name trademarked. He did invest in initial child-resistant testing. That speaks volumes, especially to a C suite who are kind of distant from what’s happening on the ground and would like to see that they’re protected. That’s less money for them to invest. That’s less risk for them to take on.

So, from a corporate perspective, I think that if you’re in a position where you can invest more in your product, do it. If you’re not, it’s not an automatic no, it’s not a closed door. It just results in the company’s having to invest more, and it may take more time to get the item to market. Because we can’t put a child-resistant package on the shelf before it’s actually been tested.

It’s still such a new industry. A lot of things are still getting worked out. At this point, how I see it is “Adapt, improvise, and overcome.”

How important is the relationship-building aspect of a licensing agreement?

I don’t think of them as a licensee, us as a licenser. I look at the inventor as a partner. Their success is our success and vice versa. If we’re going to invest in patents and marketing material and everything else — put all that backing behind it — we absolutely want to see the product succeed. And when an inventor gets his royalty check, seeing that smile on their face is always a great thing. You know what I mean? Who doesn’t want more passive income?

Put another way, if an inventor comes to me with just a sketch of a product, and I have to develop that product, that inventor is not going to get a higher royalty rate because the expense is higher. He will still get paid fairly, of course.

I always tell inventors, “Look, the more you do, the more you walk in the door with, the more you get. The more risk you take away, the higher royalties are going to be.”

What are inventors doing wrong? 

Getting too attached to an idea, taking feedback the wrong way, is something I see. For example, if someone turns you down, that doesn’t mean your idea is bad. It just means that maybe it’s not a fit. Don’t be turned off by being turned away. That just opens 100 more doors for you. You have got to keep grinding and not take any rejection personally. That’s the best advice I have.

This is one exciting industry! I will be attending the Marijuana Business Conference and Cannabis Expo in Las Vegas next week as well to report on the opportunities and challenges of open innovation in the marijuana industry.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

Source: The Marijuana Industry is Ripe For Inventors  

VC Fred Wilson on Grinding

VC Fred Wilson on Grinding

It is tempting to search for the one magic move that will make everything better. A new VP of sales. A new database layer in your tech stack. A new brand for your company. Moving everything to the cloud. More capital in the business.

But it is rarely one thing that a business needs to succeed. It is often a little bit of everything.

Back in the early days of Twitter, we could not keep the website and API up. We would hire advisers and they would recommend something new and we would try it and we would still go down. It was terribly frustrating and threatened the business.

During this period of instability, Twitter purchased a search engine called Summize. Summize was a small team of engineers, most of whom had come out of AOL.

After we cut the deal to acquire Summize, I asked Jack Dorsey, who was running Twitter at the time, how we planned to integrate the Summize team. He looked at me and said, “We are not going to integrate them, they are going to integrate us.” And Jack made Greg Pass, Summize’s engineering leader, Twitter’s engineering leader.

It was interesting to watch Greg and the Summize team tackle the “fail whale.” Instead of searching for a magic solution, they instrumented the entire system and just started rebuilding every part that was about to break.

It was a slow and steady approach. It took time. But within six months (or thereabouts), we had a much more stable system. And after about a year of this approach, we had mostly said goodbye to the fail whale.

Grinding isn’t very satisfying. It is hard to stand up in front of everyone and say “we are going to fix things around here bit by bit with a lot of hard work.” Big flashy moves are an easier sell most of the time. But they don’t work nearly as well and are prone to complete and abject failure.

If given a choice between a flashy operator or a grinder, I will take a grinder every time. It is a much higher percentage bet. It requires faith and patience and the results are sometimes hard to see. But if you look at the results from grinding it out over a long enough time frame, you can see the power of that approach.

Source: VC Fred Wilson on Grinding

Sana Benefits gets $6.3 million to disrupt ‘Stone Age’ healthcare insurance industry

Sana Benefits gets $6.3 million to disrupt ‘Stone Age’ healthcare insurance industry

Sana Benefits, an Austin company that wants to disrupt the health care insurance industry with more efficient software, said it has raised $6.3 million in seed funding.

The company joins a raft of upstarts remaking a notoriously inefficient health care system. These startups include players like Oscar Health, Clover, and Bright Health — all of which have raised hundreds of millions to billions of dollars over the last few years. Most of them have been focused on individuals and not as much on the employer plans that cover half of Americans.

Sana distinguishes itself in that it’s one of the few new companies focused on employers, and specifically the market for small and medium sized businesses (a thousand or fewer employees). This small business market covers a third of all employees — for a total market north of $200 billion, according to Sana CEO Will Young. Collective Health, which has raised more than $400 million, also targets employers, but only large enterprise customers.

The company’s emergence is the latest example of how massive industries like health — which makes up a fifth of the U.S. economy — can still be disrupted by applying what by Silicon Valley standards is modern, off-the-shelf software. In Sana’s case, it has taken things like Amazon’s HIPAA-compliant cloud architecture, Rails, and React and replicated incumbent industry data systems into a single web-based application — one that automates tasks that most other companies are still using manual labor for.

“Health care in general is a train-wreck of an industry,” says Young. “It is in the Stone Age.” He estimates that wasteful spending costs the U.S. health care system roughly $1 trillion a year, much of it from superfluous administrative costs.

Because of its ability to automate, Sana can operate with lower costs of administration, allowing it to drop rates 30% lower than market averages, said Young.

The lower costs, says Young, has helped it land dozens of customers (including Door and Abodewell), totaling thousands of members. It’s earning millions of dollars in revenues, up from nothing last year, according to Young. It offers free premium services to customers through partnerships with Plushcare, Maven Clinic, Beam Dental, ClassPass, and Calm.

The funding comes from Gigafund and Trust Ventures, which just invested $3.6 million, bringing total seed funding to $6.3 million. Both of those funds have focused on investments that aim to transform industries, said Young.

Sana can lower costs by using automation to adjudicate claims in 97% of all cases, meaning no humans are needed for the vast majority of cases — up from 0% when the company launched.

The ease of automation derives from the company’s decision to build its software from scratch, pulling data from incumbent industry systems.

That contrasts with most of the rest of the industry, where insurers usually rely on bloated legacy applications that were typically coded in the 1990s and aren’t compatible with one another. Most insurers employ different pieces of software for things like underwriting, accounting, member enrollment, and claims processing. These systems use clunky FTP servers and legacy data formats, where data is often delayed. Thus a single claim can be represented inaccurately across these systems.

Sana, by contrast, has integrated the data so that anyone looking at it “sees a single source of truth,” says Nathan Hackley, cofounder and technical lead at Sana.

To wring efficiencies from its claims process, Sana employs only two people in its claims department: one, the head of claims, pays the claims, and an engineer works alongside that person to automate all similar future claims. So in effect, the head of claims is really paying the claims and all future claims that look like it. The company can persist with just two employees for a long time, says Young, whereas other companies with comparable business might be using six or seven people.

Sana takes this same efficient approach across the business — pairing operations staff with engineers who automate. In Sana’s underwriting practice, for example, there’s only one full-time person. That person is doing the equivalent of what other companies employ 12 people to do, says Young. “We are just pulling in employee information, and the system spits out the right answer … we’re not sending Excel spreadsheets back and forth.”

Young said building software from scratch took a bigger up-front investment — about a year and a half of tech work, and $1 million in capital for setup costs — with tens of thousands of lines of code to vertically integrate the health care insurance software stack. This involved regular meetings with an industry consultant to make sure Sana properly coded edge cases required by regulations.

So far, the company has eschewed using AI or machine learning, in part because of the black-box problem of most AI models. “You put data in, and it’s hard to know why the system provides its answer,” says Hackley. But it’s also because there is still a finite amount of data related to each claim, making it easier to write a rule-based system for automation, Hackley adds.

Finally, on the customer-facing side, Sana has partnered with data vendors to calibrate rates more efficiently than the traditional method of using actuarial tables. It works to steer people to the best hospitals based on data analysis, and using telemedicine in cases where it is more cost effective.

Source: Sana Benefits gets $6.3 million to disrupt ‘Stone Age’ healthcare insurance industry

TetraScience Nabs $8M Series A

TetraScience Nabs $8M Series A

TetraScience, developers of the industry’s first cloud-based data integration platform for life sciences R&D, today announced it has secured a strategic investment from Waters Corporation (NYSE: WAT), the world’s leading specialty measurement company. Waters Corporation joins a roster of leading venture investors in TetraScience’s $8M series A round of financing including Floodgate Capital, First Round Capital, Underscore VC, Founder Collective, and Y Combinator.”We are honored by this vote of confidence from a renowned industry leader,” said Siping (Spin) Wang, Co-Founder and CEO of TetraScience. “Waters Corporation brings to the table over 60 years of experience in high value analytical technologies, scientific expertise, and a global footprint. We look forward to working together to transform the future of R&D.”

Wang (EECS M.S., MIT) co-founded TetraScience with Salvatore Salvo (Metamaterials Ph.D., University of Naples) to solve the challenges in deriving value from scientific data that they experienced first-hand as researchers. With life sciences R&D becoming increasingly data-driven, and operationally complex due to evolving models for distributed scientific research, Wang and Salvo recognized the need for new data integration infrastructure to power transformational changes in drug discovery.

Tetrascience’s cloud-based platform enables easier collection, normalization and centralization of R&D data, expediting development timelines and allowing scientists to make better informed and earlier decisions. Demand for the solution has been staggering, with 70+ leading pharmaceutical and biotech companies using TetraScience’s platform.

“We believe that dynamic, young companies like TetraScience have an enabling role to play in advancing the way the scientific community collects, shares and analyzes R&D data,” said Alan Millar, Sr. Director of Corporate Development for Waters Corporation. “Waters is excited to support TetraScience via this investment.”

TetraScience will use this funding to expand its commercial team, supporting a growing list of global customers and partners.

About TetraScience (www.tetrascience.com)

TetraScience is a cloud technology company powering transformational changes in life sciences R&D, to accelerate discovery and improve human life. TetraScience’s data integration platform centralizes R&D data from instruments, lab systems, and lab partners, providing advanced capabilities to collect, standardize, analyze, and share data with downstream applications. By relieving the burden of data management, TetraScience helps scientists expedite development, reduce cost, and unlock new opportunities for data-driven discovery. TetraScience is backed by Waters Corporation, Floodgate Capital, First Round Capital and Underscore VC, and counts 70+ leading pharmaceutical and biotech companies as customers.

About Waters Corporation (www.waters.com)

Waters Corporation (NYSE:WAT), the world’s leading specialty measurement company, has pioneered chromatography, mass spectrometry, and thermal analysis innovations serving the life, materials, and food sciences for more than 60 years. With approximately 7,200 employees worldwide, Waters operates directly in 35 countries, including 15 manufacturing facilities, and with products available in more than 100 countries.

Source: TetraScience Nabs $8M Series A

Tmunity Therapeutics Pulls In $75M

Tmunity Therapeutics Pulls In $75M

PHILADELPHIA, PA, Tmunity Therapeutics toady closed a $75 million Series B financing.

Click here for more funding data on Tmunity Therapeutics
To export Tmunity Therapeutics funding data to PDF and Excel, click here
Tmunity Therapeutics, in pursuit of its vision to save and improve lives by delivering the full potential of next-generation T-cell immunotherapy, closed a $75 million Series B financing. The financing was led by Andreessen Horowitz (also known as “a16z”), a venture capital firm that backs bold entrepreneurs building the future through technology and includes participation from a16z’s Cultural Leadership Fund. Joining the Series B financing are Westlake Village BioPartners, Gilead Sciences, The University of Pennsylvania, Be The Match BioTherapies and BrightEdge, the philanthropic impact fund of the American Cancer Society.The proceeds from the Series B will continue to fund ongoing and planned research, clinical development of product candidates, the continued build-out of the Company’s proprietary, vertically-integrated viral vector and cell therapy product manufacturing, working capital and other general purposes. Since inception, Tmunity has raised $231 million.

“We are fortunate to be funded by impressive investors who share our commitment to patients and our vision to dramatically change the way cancer is treated,” said Usman “Oz” Azam, MD, President and Chief Executive Officer of Tmunity. “We see ourselves leading the innovation of the future of oncology treatment by uniting our foundational competences in cell therapy with expertise in building new constructs, translating them and getting them into the clinic.”

As part of the Series B financing, Jorge Conde, General Partner at a16z, will join the Company’s Board of Directors. Mr. Conde leads a16z’s investments that are at the cross section of biology, computer science and engineering.

“To win the war on cancer, we need smarter weapons. Tmunity’s founders Carl June and Bruce Levine invented CAR-T, one of the most profound breakthroughs against cancer in recent history. Together with Oz Azam, who with his team, brought the first CAR-T therapy to market, the company has built a pioneering platform that has produced an unrivaled therapeutic pipeline with programs already in human clinical trials for both solid and liquid tumors. This is the dream team to deliver on the bold and promising mission to cure disease using engineered T-cells,” said Conde.

About Tmunity Therapeutics

Tmunity is a private clinical-stage biotherapeutics company focused on saving and improving lives by delivering the full potential of next-generation T-cell immunotherapy to patients with devastating diseases. Integrating a foundational collaboration with the University of Pennsylvania (Penn) with the groundbreaking scientific, clinical, and manufacturing expertise, and the demonstrated track record of its founders (Carl June, MD; Bruce Blazar, MD; Bruce Levine, PhD; Yangbing Zhao, MD, PhD; Jim Riley, PhD; and Anne Chew, PhD), Tmunity represents a new center of gravity in translational T-cell medicine. Through the University of Pennsylvania, the Parker Institute for Cancer Immunotherapy and collaborations with the University of California San Francisco and Children’s Hospital of Philadelphia, the company is developing a diversified portfolio of novel treatments that exhibit best-in-class control over T-cell activation and direction in the body, with a focus in cancer and three programs currently in clinic development. With headquarters in Philadelphia, Tmunity utilizes laboratories and production facilities at Penn and its own dedicated cGMP manufacturing facility in East Norriton, PA, to pursue process improvement and production scale-up in support of clinical development of its T-cell therapies. For more information, visit www.tmunity.com and connect with us on social media at @TmunityTx and LinkedIn.

Source: Tmunity Therapeutics Pulls In $75M

Duality Technologies raises $16 million for privacy-preserving data science solutions

Duality Technologies raises $16 million for privacy-preserving data science solutions

Newark, New Jersey-based Duality Technologies, a provider of privacy-enhancing data science solutions, today announced that it’s raised $16 million in a series A round led by Intel Capital, with participation from Hearst Ventures and existing investor Team8. Duality previously raised $4 million in a November 2018 round, which together with this latest tranche brings its total raised to about $20 million.

Cofounder and CEO Alon Kaufman said that Duality will leverage the fresh funding to continue developing its secure computing platform and to expand into new segments. To this end, it recently collaborated with Intel to explore the challenges of AI workloads using encryption, which informed efforts like the open source HE-Transformer backend for Intel’s nGraph neural network compiler.

“AI and Machine Learning are transforming countless industries, but they have also created new privacy challenges that regulation alone can’t solve,” said Kaufman. “We are excited by the investment of Intel Capital, Hearst Ventures. and Team8 in Duality, and look forward to collaborating with these industry leaders in delivering innovative privacy-enhanced solutions to the market. Our mission is to reconcile data utility and privacy while unlocking a whole new world of secure collaborative business opportunities for our customers.”

Duality keeps a low profile but deals principally in homomorphic encryption, a form of cryptography that enables computation on plaintext (file contents) encrypted using an algorithm (also known as ciphertexts). It generates an encrypted result that when decrypted exactly matches the result of operations that would have been performed on unencrypted text.

Duality’s SecurePlus offering enables multiple parties to collaborate without exposing their data or analytics models. Data remains protected end-to-end even when analyzed in untrusted cloud environments, courtesy “quantum-resistant” technologies that conform to the standards laid out by the homomorphic encryption industry consortium.

Duality pitches the platform as a privacy-preserving solution for “numerous” enterprises, particularly those in regulated industries. Banks using SecurePlus can conduct privacy-enhanced financial crime investigations across institutions, the company says, while scientists can tap it to collaborate on research involving patient records. Even retailers stand to benefit with privacy-preserving data supply chain schemes enabled by homomorphic encryption.

“Intel Capital has been following the space closely, and we are excited to see secure computing and homomorphic encryption becoming practical and broadly applicable,” said Intel Capital vice president and senior managing director Anthony Lin. “We believe privacy-preservation in AI and ML represents a huge market need, and we’re investing in Duality because of its unique founding team and world-leading expertise in both advanced cryptography and data science.”

Hearst Ventures senior managing director Kenneth Bronfin added, “As a leading global, diversified media, information and services company with more than 360 businesses across industries, we are acutely aware of the increasing importance of data and data collaboration in companies across many market segments. Sensitive data is constantly being generated by both individuals and businesses; there needs to be technology available that protects such data while allowing us to extract insights.”

Duality was cofounded in 2016 by Kaufman, chairwoman Rina Shainski, Turing Award-winning professor Shafi Goldwasser, MIT professor Vinod Vaikuntanathan, and open source pioneer Dr. Kurt Rohloff. Vaikuntanathan is the co-inventor of the foundational BGV homomorphic encryption scheme, and Rohloff is the founder of the PALISADE homomorphic encryption open source library on which Duality’s platform is based.

Sign up for Funding Daily: Get the latest news in your inbox every weekday.

Source: Duality Technologies raises $16 million for privacy-preserving data science solutions

%d bloggers like this: