Venture capital investment is tightening across the board, but for a company like Milwaukie-based FloraWorks that operates at the crossroads of biotech and cannabis, the potential investor pool can be even smaller.
So news of a $2.25 million Series A is attention-grabbing. And, according to co-founder and CEO Alleh Lindquist, this is just the first step in the company’s growth strategy.
“We have a big vision for what we are doing. This is not the last raise. This is the foundation to start building where I see us going,” said Lindquist.
FloraWorks specializes in discovery and commercialization of novel cannabinoids. A big focus right now is the nonintoxicating cannabinoid known as CBN, or cannabinol. FloraWorks makes CBN from hemp oil by speeding up the oxidative process and then purifying the output into a crystalized, CBN isolate.
FloraWorks supplies CBN to other manufacturers. It has more than 125 customers nationwide. The cannabinoid is popular in the edibles market. It has also been popular as a sleep aid, though its effectiveness in this area has been anecdotal.
That is until FloraWorks zeroed in.
This week the company announced results from a double-blind, placebo-controlled sleep study conducted by the company Radicle Science. The results showed significant improvement in sleep compared to placebo and improvement compared to melatonin, a popular natural sleep aid.
“It’s very promising to discover that CBN could be just as effective — and possibly better — than melatonin, considering many cannot tolerate melatonin’s side effects,” said Dr. Susan Hewlings, vice president of research affairs at Radicle Science.
These results will now be peer reviewed, Lindquist said. Once peer review happens and the results are published it will be an even bigger milestone for the startup, he said. The results are needed to gain Food and Drug Administration approvals, either through generally recognized as safe or new dietary ingredient protocols.
FDA compliance is needed for new Oregon state rules that are set to go in effect in 18 months. Peer-reviewed results will also help to push CBN into the sleep aid market.
This Series A will take the company through these core initiatives and further push FloraWorks research and discovery work, he said.
Lindquist has been working in the cannabis industry for years had been mostly on the recreation side. He sold his last company, Swell, before the current challenges hit the recreation market. He helped launch FloraWorks to not only pursue the CBN market but to dive further into the science of cannabis and how it can used in therapeutics.
It was a passion project for him until a year and a half ago when he was asked to take over the CEO role.
To date the 4-year-old company has raised $5.5 million from investors. An earlier round was led by RSD Capital.
The lead investor on the Series A is a life science fund and Lindquist is hoping that relationship will take the startup out of strictly the cannabis investor realm. He expects to be out raising again fairly quickly.
Lindquist is excited about what FloraWorks can do to further the understanding of cannabis and its components and how it can be used for therapeutics.
“We define compounds and isolate them and see how they work by themselves and how they work together. It’s big complicated fundamental science questions,” he said.
