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PAX Reportedly Eyes $400M For Vaporizers

Update: On April 22, 2019, TechCrunch confirmed that PAX Labs raised $420 million at a valuation of $1.7 billion. Investors included Tiger Global Management, Tao Capital Partners, and Prescott General Partners.

PAX Labs, maker of cannabis vaporizers, is in the process of raising more than $400 million in a funding round that could value the company at about $1.3 billion, The Information reported on Monday.

The publication said it saw a presentation that PAX had put together for investors which showed that the San Francisco company was looking to only raise $150 million. PAX apparently revised its target “after encountering strong demand from investors who wanted to contribute more,” The Information reported.

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The increased interest in the company is likely due to investors betting on the fact that marijuana will be legalized for recreational use. PAX, in particular, estimates it will notch $113 million in revenue this year with potential for that to grow by more than ten times by 2023, according to The Information.

So far, PAX has raised a total of $121.7 million and counts Tiger Global Management, Tao Capital Partners, Evolution VC Partners, and Fidelity Investments among its backers. It raised $20 million just last October in what CEO Bharat Vasan described to Bloomberg as “a deliberately small round.”

The genesis of the company goes back to 2004 when Adam Bowen and James Monsees, as Stanford grad students, began developing an e-cigarette prototype out of foam. They ultimately formed an e-cigarette company called Ploom. Ploom’s ModelTwo product was acquired by Japan Tobacco International in 2015. The duo bought back JTI’s stake in their company and renamed it Pax Labs, of which e-cigarette company JUULwas ultimately spun out. In December, we wrote about how reports that Marlboro maker Altria Group Inc. was going to take a 35 percent stake in JUUL were true. As such, Bowen and Monsees were set to become the first e-cigarette billionaires.

In general investments in cannabis-related startups have picked up steam in recent months. In February, marijuana producer and distributor Flow Kana closed on a $125 million Series B in what was touted as the largest private funding round for a U.S.-based cannabis company.

In January, San Jose, California-based Caliva announced it raised $75 million in an “oversubscribed” financing. What made that round interesting were the investors. Both Carol Bartz, former CEO of Yahoo and Autodesk, and three-time Super Bowl MVP and Pro-Football Hall of Famer Joe Montana, participated in Caliva’s initial round of funding.

Last October, I wrote about how a company that tracks and traces cannabis plants and products across the supply chain raised $50 million in a growth funding round led by global investment giant Tiger Global Management and rapper/investor Snoop Dogg’s Casa Verde Capital.

Lakeland, Fla.-based Metrc was founded in late 2013 to serve Colorado’s cannabis enforcement division. (For those who didn’t know, Colorado was the first state to establish a recreational cannabis market). And finally, last June, our own Savannah Dowling put together a list of the “top 10 cannabis startups with the most green.”

Illustration: Li-Anne Dias

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