Exclusive Interview with Bespoke Financial Co-Founder and CEO 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 companies across multiple U.S. markets and industry segments. Co-Founder and CEO George Mancheril spoke with New Cannabis Ventures about Bespoke’s track record, investment approach and pipeline.
Listen to the entire interview or read the summary below:
An Experienced Leadership Team
Mancheril comes from a traditional finance background. Fresh out of school, he worked at Goldman Sachs. After that, he focused on structured credit at Guggenheim Partners Investment Management. He spent about 12 years on Wall Street before co-founding Bespoke with the intention of capturing first-mover advantage. Mancheril anticipates that cannabis will eventually operate like any other consumer product industry, which means debt capital will have an important role to play.
The Bespoke leadership team gathers people with a broad set of skills from the startup world, technology, finance and cannabis. Brittney Lifsey is Bespoke’s Executive Vice President of Finance. She brings more than 10 years of experience in public and private accounting to the team. Head of Technology Warren Shen brings in-depth experience from the technology sphere. Before joining the Bespoke team, Head of Revenue 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 intention of eliminating working capital limitations. Each product is designed to address specific challenges operators in the industry face. For example, Bespoke’s invoice financing enables companies to unlock value on their balance sheets and access capital against their accounts receivables, according to Mancheril. The company also offers inventory financing, which allows operators to pay vendors directly through a line of financing. The company’s line of credit product is its most popular, according to Mancheril.
While Bespoke’s debt financing helps cannabis companies address capital limitations and bottlenecks, it also enables growth. Financing can help companies improve profitability and to capture expansion opportunities.
The company’s capital has a versatile set of use cases, according to Mancheril. Bespoke currently works with cannabis companies in 12 different states and across the entire supply chain. Its portfolio includes cultivators, manufacturers, distributors, dispensaries, ancillary service providers and CBD companies. Bespoke works with companies doing more than $100 million in annual revenue, companies doing $10 million in annual revenue and everything in between.
When considering investment opportunities, the Bespoke team looks for strong management teams. And they look for established companies that have some operating history that Bespoke can underwrite. Bespoke does not focus on startups or pre-revenue companies.
Mancheril pointed to the strength of the company’s business model and its success in finding companies that are poised to grow. More than 90 percent of Bespoke’s borrowers have significantly higher credit limits than what was initially approved for them, according to Mancheril.
Pre-roll brand DreamFields is one of the key investments in the Bespoke portfolio. Bespoke has worked with the brand for more than two years. Over that period, DreamFields has become a top pre-roll brand in California, and it is poised to take its Jeeter brand into more markets.
Competitive Position
The public markets have been characterized by volatility, and debt financing remains relatively sparse in the cannabis business compared to other industries, according to Mancheril. Bespoke is focused on educating the industry about 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.
The Pipeline
Since inception, Bespoke has raised more than $200 million in capital. Because it offers lines of credit, it has seen its capital recycled. Bespoke’s originations are higher than the amount of capital it has raised. Bespoke has financed more than half a billion dollars in GMV for its clients, and it is on track to at least double that number going into this year, according to Mancheril.
The Bespoke team is looking for opportunities for continued penetration in its existing 12 states, including large markets like California and Colorado. It will also selectively add markets that are ready for its financing solutions. Mancheril expects to add four to five new states across the U.S. 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 U.S. When Bespoke first started, the team needed to go out and actively engage with operators. Now, the company is experiencing reverse inquiry.
Bespoke Financial Investors
Bespoke’s investor network includes Casa Verde Capital as a lead investor. Additionally, The General Partnership, formerly Sweat Equity Ventures, was a lead investor in Bespoke’s Series A. The General Partnership has brought technical expertise that helps the company to leverage its technology tools to support its ability to quickly underwrite clients.
The company also has investors and family offices with backgrounds in traditional finance. Mancheril pointed to Rob Stavis, a partner with Bessemer Venture Partners, and Philip Barach, the former president of DoubleLine Capital. Bespoke also closed a $125 million credit facility at the end of 2021.
Bespoke is at least a couple 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 takes place.
Defining Investment Success
Loan tape and credit performance are key performance indicators for Bespoke. The company continually optimizes its internal processes to make it as easy as possible for its customers to access capital. With more than 90 percent of its borrowers upping 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 plenty of opportunity remaining in mature markets, like 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 entire interview:
