Speaking to Yona Cymerman, Co-founder & COO of Can Innovations, Cannabis Report finds out more about the largest hub of canna-tech innovation in Israel and how it brings Israel innovations to the Canadian, and soon to the European, market.
Can you introduce us to Can Innovations and explain the services on offer? Where did the idea for the concept originate from?
Can Innovations is the largest hub of canna-tech innovation in Israel, with a focus on commercialization for Canada.
We are the official cannabis consultants to international VCs, and our board is made up of global names in the industry. We also hold a tremendous network of Canadian LPs, extraction companies and strategic investors who we work with on a daily basis to bring Israeli cannabis innovations to the Canadian market.
I am located in Israel and am responsible for finding and vetting the innovation companies (with a focus on Israel and Europe). My partner lives in Toronto and is well established in the cannabis industry there. She is responsible for nurturing the technology and integrating it into the Canadian industry.
What challenges have you faced so far in the cannabis industry and how were these overcome?
The Israeli cannabis market is teeming with potential. Israeli technology companies abound, often with great ideas and strong teams in place.
While there have been some significant investments in the industry, most have gone to cultivators (cannabis growers), and not the incredible products that are being developed based on real science that leverage the startup nation’s reputation for innovation.
As a burgeoning industry, there is a short window of opportunity for startups and entrepreneurs who are developing innovative technologies to gain an impressive market share quickly. However, in order to attract investors and partners, the technologies being developed must have clear advantages over competitors, must solve existing problems, and must fit the ever-changing regulatory limitations.
Based on many discussions with investors and the biggest licensed cannabis producers in Canada, we found that the lack of a clear commercialization strategy that properly grasps the international market is often a deterrent for international investors and partners. By not clearly demonstrating a supported go-to-market strategy that shows thoughtful and realistic comprehension, Israeli cannabis tech companies are making it difficult for themselves to succeed.
There is an inherent barrier to entry for Israeli companies created by distance. But beyond that, there are gaps in business etiquette. Overarching secrecy, strong-arm negotiation tactics, unreasonable valuations and empty promises are holding the investor community back from putting down significant capital in Israel.
At Can Innovations, a canna-tech innovation hub based in Israel and Canada, we often see Israeli companies present truly innovative technologies but lacking an understanding of regulatory compliance. Many are expecting investors to give money without proving a viable business case. Investors have expressed frustrations at the lack of understanding regarding what the market wants, the sharing of information and the need for transparency.
The Israeli cannabis market often misses what is happening in other international markets. Unlike the traditional tech market where trends move slowly, cannabis regulatory changes and consumer trends are constantly shifting and evolving. For example, in North America and especially in Canada, there is a medical cannabis market but there is very little differentiation between medical and recreational products. Neither product can make claims and are rarely covered by insurance. Therefore, many patients or customers buy their cannabis from recreational retailers, even if it’s for medical use. Customers buy recreational cannabis to help them relax or sleep (medical) just as often as they go into a recreational retail store to “get high.”
However, when Israeli cannabis companies speak about medical cannabis, they really mean pharmaceutical usage, where a patient comes to a physician with an ailment like fibromyalgia, eczema, insomnia, etc. and the doctor tells them exactly what to take, how much to take and how often. But that level of pharmaceutical usage is almost non-existent even in the most developed medical markets.
Every company is competing with hundreds of other companies for attention – from every region in the world – and regulations are changing on an almost daily basis. While the Israeli technology may be superior, that won’t matter if the company can’t break through the noise and build relationships.
Not knowing how to bring your product to your target market, who your competitors are, or if alternatives already exist is an error we see every day. Investors are bombarded by new ideas and they won’t spend time on a company that makes promises it can’t substantiate with real science, won’t divulge information, is focused on many things instead of doing one thing really well, is slow to follow up, or is difficult to work with – regardless of how impressive the product may be.
Investments are still taking place every day in the cannabis space. But more are moving downstream to brands, retailers and technology companies. The discrepancy between the impressive technologies that Israeli companies have to offer to how they are perceived by the international market is huge. The discrepancy between the technologies those companies are developing, to what the market actually needs and is ready for, is even bigger.
What is the benefit of using a company such as Can Innovations?
Our strong relationships with Canadian LPs, retailers and strategic investors mean we understand their innovation needs and can identify relevant technologies in Israel for use of service, joint venture, acquisition, investment, or more.
By asking the right questions we identify challenges and recommend the best approach for product development and market penetration. We look outside to identify opportunities and threats, and look inside at resources, capabilities, and goals. We identify and establish relationships with relevant partners and service providers, and outreach to potential investors and customers for capital raising and use of service. In addition, we can leverage our international network of experts and consultants which we pull in as needed. These include experts in compliance, legal, technology, market analysts and more.
With boots on the ground in both Israel and Canada, our services mean everyone benefits from our knowledge and network.
What is the most important thing for companies to consider in this dynamic industry?
The business side of the global industry has matured and is now behaving much more like traditional markets. Investors are smarter, no longer investing in an idea but taking a more analytical approach and only investing in a commercially viable company. Technology companies can’t rely on the next great idea. They must show commercialization plans including a solid strategy, distribution agreements and a logical approach to partnership expectations. Company valuations are based on comparables, revenue and real potential.
Investors want to see revenue generation, a pilot, testimonials – even if small, and a team that is open to creative partnerships. Just like in any other industry, multiples are based on revenue and concrete strategies, plus investors that get in early need room to see an upside for their risk.
Would you like to talk about your clients?
Our clients cover the entire supply chain including:
- AgTech (Genetics, Breeding tech, growing materials)
- Infrastructure (water, lighting)/ AI management/control
- Delivery Methods
- BioTech / Pharma
What are the plans for the future and your ultimate goal?
This year we expect to expand to Europe. Our ultimate goal is to assist Israel in pushing the entire global industry forward with safe, stable, science-based cannabis products for everyday usage and treatment.
Can you introduce us to your team?
Established July 2018. Founded and managed by female entrepreneurs with a strong track record in investments, business development and strategy.
Sarah Tahor, Founder & CEO: Formerly VP Business Development and Lyft & Co. Personal connections to C-suite executives at the largest Canadian LPs. Located in Canada
Yona Cymerman, Co-founder & COO: Prior to Can Innovations, I ran Shalhevet Communications, a boutique marketing strategy firm in Israel (est. 2007). Located in Israel.