Exclusive interview with the co-founder and CEO of Bespoke Financial, George Mancheril
Founded in 2018, Bespoke Financial is a fintech platform that provides the cannabis industry with scalable, non-dilutive financing. The Company serves cannabis businesses in multiple markets and industry segments in the United States. Co-Founder and CEO George Mancheril spoke to New Cannabis Ventures about Bespoke’s background, investment approach and pipeline.
Listen to the full interview or read the summary below:
An experienced management team
Mancheril comes from a traditional financial background. Fresh out of school, he worked at Goldman Sachs. He then focused on structured credit at Guggenheim Partners Investment Management. He spent around 12 years on Wall Street before co-founding Bespoke with the intention of capturing first-mover advantage. Mancheril predicts that cannabis will eventually operate like any other consumer product industry, which means loan capital will have an important role to play.
The Bespoke leadership team brings together people with a wide range of skills from the worlds of startups, technology, finance and cannabis. Brittney Lifsey is Bespoke’s Executive Vice President of Finance. She brings to the team more than 10 years of experience in public and private accounting. Chief Technology Officer Warren Shen brings deep experience in the tech space. Prior to joining the Bespoke team, revenue manager Judson Hill spent years working with a cannabis compliance software platform. Mancheril previously worked with head of operations and risk Rachel Harbert at Guggenheim Partners Investment Management. She brings her experience in deal structuring and risk analysis to the Bespoke team.
Debt financing approach
Bespoke offers five different debt financing products to the cannabis industry with the goal of eliminating working capital limitations. Each product is designed to meet the specific challenges faced by industry operators. For example, Bespoke invoice financing allows companies to unlock value on their balance sheets and access capital against their accounts receivable, according to Mancheril. The company also offers inventory financing, which allows operators to pay sellers directly through a line of financing. The company’s line of credit product is the most popular, according to Mancheril.
While Bespoke debt financing helps cannabis companies deal with capital limitations and bottlenecks, it also enables growth. Financing can help businesses improve profitability and seize opportunities for expansion.
Enterprise capital has a versatile set of use cases, according to Mancheril. Bespoke currently works with cannabis companies in 12 different states and across the supply chain. Its portfolio includes cultivators, manufacturers, distributors, dispensaries, ancillary service providers and CBD companies. Bespoke works with businesses making over $100 million in annual revenue, businesses making $10 million in annual revenue, and everything in between.
When reviewing investment opportunities, the Bespoke team looks for strong management teams. And they look for established companies that have an operating history that Bespoke can underwrite. Bespoke does not focus on startups or pre-revenue companies.
Mancheril highlighted the strength of the company’s business model and its success in finding companies ready to grow. More than 90% of Bespoke borrowers have significantly higher credit limits than they were originally approved for, according to Mancheril.
The DreamFields pre-roll brand is one of the key investments in the Bespoke portfolio. Bespoke has been working with the brand for over two years. During this time, DreamFields has become one of the leading pre-roll brands in California and is set to expand its Jeeter brand into other markets.
Public markets have been characterized by volatility, and debt financing remains relatively scarce in the cannabis sector compared to other industries, according to Mancheril. Bespoke focuses on educating the industry on the benefits of working with a lender. The funding landscape remains fairly thin, and Mancheril expects the lion’s share of investor capital to enter the space once federal regulations change.
Since its inception, Bespoke has raised over $200 million in capital. Because it offers lines of credit, it has seen its capital recycled. Bespoke’s issuance is greater than the amount of capital it has raised. Bespoke has funded over half a billion dollars in GMV for its clients, and it’s on track to at least double that number this year, according to Mancheril.
The Bespoke team is looking for continued penetration opportunities in its existing 12 states, including large markets like California and Colorado. It will also selectively add ready markets for its funding solutions. Mancheril plans to add four to five new states to the United States over the next year. He discussed states of potential interest, such as Ohio, Missouri, New York and New Jersey. Eventually, Bespoke plans to serve the entire United States When Bespoke started, the team had to go out and actively engage with carriers. Today, the company is experiencing a reverse investigation.
Tailor-made Financial Investors
Bespoke’s investor network includes Casa Verde Capital as lead investor. Additionally, The General Partnership, formerly Sweat Equity Ventures, was a lead Series A investor in Bespoke. The General Partnership has provided technical expertise that helps the company leverage its technology tools to support its ability to sign up customers quickly.
The company also has investors and family offices from traditional finance. Mancheril pointed to Rob Stavis, a partner at Bessemer Venture Partners, and Philip Barach, the former chairman of DoubleLine Capital. Bespoke also entered into a $125 million credit facility at the end of 2021.
Bespoke is at least a few years away from a public market strategy, according to Mancheril. The company will likely be more open to the idea once federal legalization or decriminalization occurs.
Defining investment success
Lending band and credit performance are key performance indicators for Bespoke. The company is continually optimizing its internal processes to make access to capital as easy as possible for its clients. With over 90% of its borrowers increasing their credit limits, Bespoke has found success in its underwriting model.
Bespoke has barely scratched the surface of the opportunities available, according to Mancheril. He sees many remaining opportunities in mature markets, such as California, Colorado, Washington and Oregon, as well as opportunities in emerging markets. While many challenges exist in the industry, including regulations, COVID and supply issues, Mancheril is confident that cannabis companies will adapt and the industry will continue to grow.
To learn more, visit the Bespoke Financial website. Listen to the full interview: