Life Sciences Venture Capital: An Informed Outlook

Cannabis Life Sciences: An Informed Outlook

Q1: 2022

Contents Overview

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Life Sciences in the Cannabis Economy

3

Life Sciences Data

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Regulatory Impact

5

The BVE Outlook

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Sources

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About BVE

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Overview Opinions are the lowest form of human knowledge. - Plato As a data-driven firm, Bonaventure Equity (“BVE”) operates in a fact-based environment and looks to measurable trends to inform our investment strategy. Viewing venture capital as a tool to deploy funding to seed and scale innovation, BVE finds itself in a crowded room of good company. Last year saw global venture capital investment climb above $640 billion. That was a 92% increase over 2020 investment totals of $335 billion.

Demand for early-stage funding also continued its meteoric rise in 2021 with Q4 totals 1 reaching $61.1 billion, a 45% increase compared to Q4 2020’s $27.6 billion.

Tracking to the intersection of innovation, demand and opportunity, BVE identifies the emerging Life Sciences verticals of the cannabis economy as the most dynamic and impactful areas for entrepreneurship and investment.

$643 billion $61.1 billion global venture capital investment 1 jumps 92% in 2021. bve.vc

global early-stage funding totals for 1 Q4 of 2021.

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Life Sciences in the Cannabis Economy The cannabis economy is defined as a global system for exchange of goods and services facilitating cannabis-enabled commerce, education, and policy.2 Nascent in its existence, and often inaccurately referred to as an industry, the cannabis economy is in fact a global macro-economy creating multiple dynamic cannabis industries in their own right. The life sciences of the cannabis economy, e.g. agronomy, biochemistry, physiology, etc., are positioned for rapid growth due to the simultaneous expansion of both policy and innovation.

Healthcare and wellness, in particular, are undergoing dramatic transformations due to regulatory advances in cannabis and psilocybin, allowing for expanded and expedited research and development.

As a result, there is a massive opportunity for pioneering life sciences companies to deliver healthcare breakthroughs, positive patient outcomes and significant investor returns.

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Life Sciences Data Cannabis

165%

Cannabis investments see significant increase over 2020 levels.4

Series A cannabis investments drop in 2021 despite increases across all other stages.4

25%

Psychedelics

$1.3B

Total capital invested in 2021 across 174 5 deals, the largest being $144 million.

The National Institutes of Health (NIH) issues first federal funding in 50 years to advance clinical research in psilocybin therapies.8

$4M

Healthcare & BioTech

$28.3B

US VC investment in healthcare on upward trajectory, up 59% over 2020's $16.8B.6

Biopharmaceuticals saw a drop in investment activity from Q1 to Q4, but retained the bulk of 2021 VC dollars.6

46%

AgTech

$12.2B

Global capital raised by 632 companies in 7 2021, up 137% over 2020.

2021 saw an increase in exits (39) including M&A and IPO over 2020 numbers.7

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179% 4

Regulatory Impact It is critical to use two separate lenses when analyzing regulatory impacts on the cannabis life sciences.

The Legislative Lens Politically speaking, the business and health of cannabis is bipartisan. The SAFE Banking Act was added to the National Defense Authorization Act and passed the House in September of 2021. While it was not voted on by the Senate, there were additional proposals from Republican officials aimed at advancing cannabis legalization. In short, the question of “when will cannabis be federally legal?” is no longer an “if”, but a “when”, and has no direct impact on BVE’s cannabis life science investment strategy.

The Policy Lens Federal agencies, such as the Food and Drug Administration (FDA), are more malleable than ever when it comes to expanding access to and advancing research and development within the cannabis life sciences. The National Institutes of Health (NIH) has issued the first federal grant in 50 years to expand research of psychedelics, including psilocybin, and the Drug Enforcement Administration (DEA) recently ended the federal monopoly that allowed only the University of Mississippi to grow cannabis for research purposes.

It is through policy advancement at the federal, state, and local levels, that innovation in the cannabis economy will flourish.

43%

42%

5.4M

of the US population reside in 3 adult-use states.

total cannabis purchases projected to be met by legal purchases in regulated marketplaces in 2021.3

forecasted number of registered medical cannabis patients by 2025.3

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The BVE Outlook All indications are that we will look back on 2022 as the year that Life Sciences and Cannabis converged. If you really want to see into the future, follow entrepreneurship. It is the founders today who are seizing the opportunity to build the companies of the future. We believe that three drivers will be key:

1.

Scientific Innovation is Just Beginning We are only at the beginning stages of unlocking the potential of the cannabis plant. Scientific discoveries will transform healthcare, therapeutics and ag-tech.

As commercial applications emerge, this future bedrock of scientific knowledge will attract entrepreneurs to build the next generation of high velocity companies.

2. Scarcity of Cannabis Venture Capital will Persist

Despite the increase in overall funding, cannabis venture capital will not be able to meet the demand for capital. Startups in particular will be impacted as the growth in venture capital firms and angel investors will be unable to finance the exponential expansion of cannabis entrepreneurship. Investors will need to be more particular in what verticals of the cannabis economy they invest in.

3.

Founders Want More than Just Capital Founders will continue to need to raise capital from angel investors, family offices and other non-institutional funding sources, while demanding more from their investors. According to IDC Research, founders value partners with a broader range of resources, benefits and value added services.10 Veteran founders in particular understand that they need partners who can help them with different needs at different stages of their companies’ life cycle. Capital alone will not be enough for investors to keep pace with the opportunities in their verticals of focus.

It is our hope this outlook report has broadened your knowledge on the Life Sciences of the Cannabis Economy, be it as an entrepreneur or investor. To learn more about Bonaventure Equity, please visit bve.vc and join us as we “Venture Further”.

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Sources 1. Teare, G. (2022, January 21). Global venture funding and Unicorn Creation in 2021 shattered all records.

Crunchbase News. Retrieved January 26, 2022, from https://news.crunchbase.com/news/global-vc-fundingunicorns-2021-monthly-recap/ 2. O’Brien, R. (2020). Cannabis Capital: How to Get Your Business Funded in the Cannabis Economy. Entrepreneur Press.

3. Cannabis Capital Raises Triple to USD $6 Billion in First Half of 2021. New Frontier Data. Retrieved November 12, 2021 from https://newfrontierdata.com/cannabis-insights/cannabis-capital-raises-triple-to-usd-6-billion-in-firsthalf-of-2021/ 4. Burns, M. (2021, October 14). Cannabis Investment Jumps 82% the Second Half of 2021, 165% Over 2020 Levels.

TechCrunch. Retrieved November 12, 2021 from https://techcrunch.com/2021/10/14/cannabis-investment-jumps82-the-second-half-of-2021-165-over-2020-levels/ 5. Vaswani, R. (2020, December 11). Emerging Space Brief: Psychedelics. Pitchbook.

6. Norris, J., Bousleiman, R., & Atsavapranee, B. (2022). Healthcare Investments and Exits. Silicon Valley Bank.

7. Wellborn, K. (2022, January 6). 2021 AgTech Venture Capital Investment and Exit Roundup. CropLife. Retrieved January 25, 2022, from https://www.croplife.com/precision/2021-agtech-venture-capital-investment-and-exitroundup/ 8. Haridy, R. 2021, October 21). Psychedelic Therapy Research Gets First US Government Funding in 50 Years. New Atlas. Retrieved January 25, 2022 from https://newatlas.com/health-wellbeing/nih-funding-psychedelic-therapyjohns-hopkins-psilocybin-smoking/ 9. Othman, A., Speiser, M., Cahill, L., & Oddo, A. (2021, October 28). The State of US Early-Stage Venture & Startups: 3Q21. Silicon Valley Bank.

10. de Bruin, S., Wilson, S.. (2021, November). What Startups Need Most and Where They Find It: Insights from Oracle’s Startup Program. Oracle for Startups.

About BVE Established in 2014, Bonaventure Equity, LLC (“BVE”) is a botanical life sciences venture capital firm. BVE partners with dynamic founders and management teams at the forefront of scientific innovation and commercialization. Along with capital, BVE provides access to regulatory, scientific and clinical expertise to support the teams we back as they pioneer transformative healthcare ventures.

Bonaventure Equity, LLC 500 N West Street Raleigh, NC 27603 (561) 320-2661 info@bve.vc bve.vc

The sole purpose of this outlook report being provided by Bonaventure Equity, LLC is to provide general information only and should not be relied upon.

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