George Mancheril took the leap from working in traditional finance to launching a fintech startup that provides crucial funding for businesses in the cannabis space. His venture, Bespoke Financial, has attracted funding from top-tier investors like Robert Stavis, Cosmic Venture Partners, Philip Barach, and Greenhouse Capital Partners.
In this episode, you will learn:
- Debt versus equity capital for startups
- Operating and scaling in highly regulated markets
- The outlook for the cannabis industry
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The Ultimate Guide To Pitch Decks
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
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About George Mancheril:
George has over 14 years of experience in the financial industry with a specific focus on asset-based lending, off-balance sheet financing of commercial assets, and structured credit.
After graduating from NYU’s Stern School of Business in 2008 with majors in Finance and Statistics, George joined Goldman Sachs as a US Interest Rates Trader, where he managed his own $2bn book of risk.
From 2013 to 2018, he worked at Guggenheim Partners Investment Management’s Structured Credit Group in Los Angeles, where he focused on structuring esoteric asset financing for a variety of commercial assets, including airplanes, container leases, and receivables.
His primary responsibilities centered around underwriting credit risk, negotiating deal structures with issuers, portfolio management of 3 debt funds totaling $1bn AUM, and credit risk management.
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Read the Full Transcription of the Interview:
Alejandro Cremades: All righty hello everyone and welcome to the dealmakerr show. So very excited. You know about the guest that we’re going to have today. We’re talk about you know, fundraising scaling billing all the good stuff you know going from the traditional finance more to the cannabis you know side of things. But I didn’t know without further ado you know, let’s welcome our guests today George Manchero welcome to the show I so originally born in India I know that they you know you came here to New York City you know, quite early in your your life. But.
George Mancheril: Um, thanks for having me good to be here.
Alejandro Cremades: But yeah, so give us our little of our walkth through memory lane. How is life growing up. So.
George Mancheril: Sure? Yeah I mean you know I don’t remember a time before I was in New York City grew up is like a regular city kid in the Bronx um, ended up going to and Nyu and you know ah post. College I had sold my soul to finance and wall street at a very young age and so really started my career in New York as well and stayed there up until you know 2013 when I actually moved out to Los Angeles
Alejandro Cremades: So what got you into finance you know I’m sure that they regardless your parents you know were super thrilled because I know that in India you know, pushing for the educational side of things you know is is a big thing I mean they you know they push you to become an engineer or a doctor. So I’m sure that you know them, you know so coming here making the.
George Mancheril: Yeah.
Alejandro Cremades: Sacrifice of coming to the Us and and and and being immigrants. You know here in the Us you know I’m an immigrant and I know that is is not easy. You know to come here I’m I’m sure that they were super proud when they saw you you know going to nwau.
George Mancheril: Yeah, know? Yeah I think that an engineer might have gone over better. But you know finance was good as a second point. But no I mean I you know, growing up even as a child. Um you know I was just very interested in keeping. Ah, pulse on world events and what’s going on. Um, you know both locally nationally internationally and finance just seemed to be an industry that really allowed me to leverage that skillset and that interest. Um, you know? Ultimately I think it’s all about. Having an informed view and an informed opinion about what’s going on in the world and what you expect will happen in the future and so I just thought it was a good complement of my skillset and interests and it was a natural calling for me and one that you know at the end of the day is it’s ah it’s a very.
George Mancheril: Dynamic environment to operate in you know, constantly things are changing and updating and I think just the excitement of all that was definitely a pull for me as well.
Alejandro Cremades: So you experienced the Goldman Sachs you know on the on the finance side of things and then also Guggenheim so why did you go from? you know, let’s say one to the other.
George Mancheril: Yeah I mean I look I mean I loved my career It’s definitely very engaging and and fruitful and also very educational. But I think you know most people when they get to a certain point their lives are in a career. You know you start to get to a place where you want to challenge yourself further and I think you know by 18 having worked in finance for you know, 14 years at that point I really was at a point at a place where I wanted to challenge myself a little bit more you know take on a little bit more of the entrepreneurial role and I saw a tremendous opportunity that lined up at the same time with cannabis legalization going across the us and so. I think it was a mix of really what I was looking for personally and professionally but also opportunity wise what was available.
Alejandro Cremades: Now it’s interesting. You know, like what you’re mentioning there because I mean for you I mean you work for quite a bit in guggenham I mean were you were there for how how long how many years so that’s ah, quite a bit of time you know so why now obviously your your.
George Mancheril: Ah, like 8 years I would say.
Alejandro Cremades: Career you know it has taken a different path you know, different things that you’re doing now from what you were doing at Guggenheim but I guess during those 8 years at Guggenheim what were your major takeaways or your biggest lessons first.
George Mancheril: Yeah I mean so at Guggenheim I focused on structured credit. Um, and you wore a couple different hats there at the same time I was a portfolio manager for structured credit investment mandates. There was an analyst function to my role and also trading and so. Really, it was a lot more informative for my current role than I had anticipated and structured credit really focuses on lending to higher risk borrowers um on the corporate level dealing with illiquid investments and even just structuring loans and so we got. Um, you know a specialty and a focus in looking at funky vanilla off the off the cuff non-vanilla deals which really required you to take a deep dive look into each each sort of but perspective borrower understand what the collateral is there what the assets are how do you structure a deal so that as a lender. You’re both getting an attractive return but also protected as much as possible and so that really did apply 1 for 1 looking at the cannabis space where you’re looking at a nascent industry brand new companies and brand new operators. But ultimately businesses that have assets you know they have value on their balance sheet. And the idea is how do you structure lending deals that allow these borrowers to access capital in exchange for the value of the assets they have on their balance sheet and then how do you monitor those relationships and those exposures on a goforward basis. So there’s a significant amount that I learned um you know I’d say in my past financial career that.
George Mancheril: You know, really just holds true regardless of what industry you’re you’re looking at.
Alejandro Cremades: So as they say you know I the us they take some time you know they’re back there and we don’t even know that they’re there. So how do you come across? you know this and in in Cannabis too I mean you say quite a different turn.
George Mancheril: Yeah, no I mean like I said I moved to l a in 2013 and at that time. Um California only had the medicinal market available in in cannabis but it was my first exposure to having you know any sort of dispensary presence or cannabis presence where I lived. When 18 ruled around California was legalizing adult use sales you know California I’m sorry Colorado and Washington had legalized previously and so they had their own adult use markets and seeing the pace at which states were adopting adult use sales. It just seemed like the green wave was here. In terms of legalization now I very firmly believe in you know the repeal of drug prohibition in this country especially as it relates to cannabis I think the war on drugs has been a failed effort and I think it’s wasted a lot of resources and it’s caused a lot of damage in terms of human capital and so. Repeal of that is you know by nature interesting to me but then to compound it with the opportunity to get involved with this industry at a nascent stage and really you know, try and bring my skill set and see if that could help propel and accelerate the success of this industry. It just seemed. Like a great meeting of you know, 2 different aspirations that I had in my own life and so I think it was it was a right mix of just seeing the opportunity materialize. Um, and like I said you know being at a point in my life where I wanted to take what I had learned and really put it take it to the next level.
Alejandro Cremades: So what was up that moment where you pulled the trigger you know in and you were like Okay, let’s go.
George Mancheril: Yeah I mean I would say it was halfway through 2018? Um, you know legalization had started in California you know a lot of this anyone who started a business knows it’s a lot about networking and meeting people and seeing what other likeminded individuals are out there thinking along the same lines and so. Even just in terms of my my own outreach and you know seeing sort of the energy and excitement that surrounded cannabis at the time I think all of that was what finally resulted in that tipping point where it was just like yeah this is a very exciting opportunity that I wanted to take a chance on.
Alejandro Cremades: So then what happened next? okay.
George Mancheril: I mean what happened next has been you know five ish years of you know just very exciting challenges that anyone has as an entrepreneur you know, um from the day of our founding you know bespoke’s main goal was to provide debt financing for cannabis operators across the supply chain and in the legal space now. That capital fundraising environment for cannabis is very very different than it is for any other industry and for any other you know, sort of segment of the startup world. 1 There’s still the federal illegality of cannabis which means a lot of institutional investors and a lot of sources of capital that you would normally turn to just will not look at cannabis. Um, and so. That pool of where these companies and even ancillary companies like bespoke and access that funding is tremendously smaller and therefore much harder to actually complete and do and achieve within the cannabis industry by itself. Fortunately, however, there, there’s always you know they ah risk adjusted return and there’s always investors with different sort of risk appetites and a lot that actually did see the value in cannabis and and the future potential and so the idea had had always been. You know how can bespoke act as a bridge between. Traditional world of finance and institutional capital and the growing cannabis industry that needed access to that capital and so we we sit in between those 2 worlds and you know leverage our expertise and evaluating these borrowers and identifying good risks and our ability to source capital in order to help these companies grow and scale and so from.
George Mancheril: The outset you know the industry has gone through different waves and different cycles and I think that’s true of any industry but especially true of an industry that’s going from 0 to 1 and really, you know very much in its formative state and for us, you know 1 thing that’s really buoyed us and kept us you know with our eye on a long-term vision has been the fact that. There’s a long-term bullish thesis here when it comes to cannabis and its ramp in in the coming years and regardless of what market you’re talking about. Um you know the trend has been consistent that cannabis consumption. Um, not just recreationally, but also from a pharmaceutical standpoint. We’re just barely scratching the surface in terms of what’s possible and and you know what this can mean in terms of improvement of quality of life for individuals out there. So despite whatever you know short-term near-term challenges have existed over the past five years long term the trend has been very consistent with our initial thesis which has been that there’s there’s a huge opportunity here. So we’re we’re a fintech platform that provides financing services so we offer lines of credit for cannabis operators to really manage their working capital needs.
Alejandro Cremades: And how do you guys make money George.
George Mancheril: Let’s say you’re a manufacturer that you know needs to go buy cannabis flour needs to go by packaging? Um, but ultimately once you produce the goods you sell them to your retail customers who may pay you on day forty five day sixty day ninety after they receive the product. Puts a serious limitation on your own business. You need capital in hand to go source the raw materials and you can’t act as sort of a bank for your customers and so with our financing products that manufacturer can go purchase. Whatever they need for their raw materials. Finish production sell to their customers ultimately collect from the dispensaries and repay our loans but we offer lines that are intended to be churned. Um you know, recycled as you move through production cycle to production cycle but really allows these companies to work towards 1 getting a bigger foothold. You know, growing market share taking advantage of expansion opportunities into new geographies or new markets and improving profitability because you know a lot of these businesses. You need to operate and take advantage of economies of scale in order to have profitability and so doing more with the fixed infrastructure that you have on hand. Puts a greater burden and a greater demand for your own working capital and if you’re strung up and a lot of that’s tied up in inventory or it’s tied up and accounts receivable working with thespoke allows you to unlock value based off those assets.
Alejandro Cremades: And and and I guess you know the other question that comes to mind is you know for an operation like this I mean you need to raise some money So how much capital have you guys raised to date.
George Mancheril: Yeah I would say it’s since inception we’ve raised over you know, $200,000,000 across debt and equity. Um, yeah from over the past five years
Alejandro Cremades: And what is the um, the um, the difference there on equity and debt for the people that are listening.
George Mancheril: Yeah, so I mean Equity Capital we use just like any other startup company does in terms of building the team and investing in the technology and and you know getting all the pieces we need in place. The debt financing is really you know the capital that allows us to go out there and originate loans. Um, and so. It’s a mix of those two because we do have 2 needs for our financing one is just for the business end in terms of developing and the other is actually for our operational end in order to Deploy capital.
Alejandro Cremades: Have you experienced a you know over time kind of like that limitation of perhaps the people that you were able to access to to secure financing you know, just like opening up and being a little bit more flexible in that regard now.
George Mancheril: Yeah I definitely agree with that consensus and it makes sense. You know the longer. The industry is allowed to operate the more of a track record the industry has and companies have the more comfortable investors get with you know, deploying capital into that. So I’d definitely say. The universe of potential capital sources had consistently grown you know since call the Twenty Seventeen 2018 it hasn’t been without its rollercoaster moments but in aggregate I would say the investor class is pretty much. Convinced that cannabis is here to stay as a cpg powerhouse and and a sizable industry going forward. The biggest filter still remains that you know federal illegality that we haven’t seen any movement on from you know Washington Dc and so there’s there’s a lot of I’d say pet up demand that’s sitting on the sidelines just waiting for that all clear. But are really in a position where they can’t move until that legalization or decriminalizing cannabis actually takes place on a federal level.
Alejandro Cremades: And what we’re thinking about also expectations of going from 1 round to the next I mean that’s ah, really interesting area because we’re talking about an industry that is at its infancy. You know is like now regulation is is starting to be implemented. You know you can see like all these states.
George Mancheril: Um, a.
Alejandro Cremades: Allowing you know for for Cannabis to be distributed and and obviously you know the investors that are coming into this segment. You know it’s not like there’s a lot of historical data that they can benchmark on So How have you guys experienced to the level of expectations. Ah. Maturing or transitioning from one financing cycle to the next.
George Mancheril: Um, I would say on our side like you said the industry’s still pretty nascent and it’s still pretty new and so I wouldn’t say that there’s been a significant period of time where that’s materially changed. But for us, you know, evaluating ah a business in a standalone business is the same. Regardless of whether there’s you know, 5 years of of history or 3 years of history at the end of the day what you’re looking for is really what are the fundamentals that you’re dealing with here. What are the operations and what’s the overall macro climate look like I would say the macro environment is definitely huge. Factor to consider in any of this consideration right? It’s like 2020 2021 vastly different both for cannabis and not and you know the world outside of cannabis than 2022 or even this car and year are and so you know I would say those factors have been more relevant than any sort of. Historical track record because again the industry today is in a vastly different position than it was even three years ago and so you know the macro considerations are ah, really paramount to make sure you you understand what’s going on with the business and teasing out what’s tied to macro versus what’s tied to micro.
Alejandro Cremades: And also you were alluding to it earlier on the perhaps the negative connotation that for some people you know this industry has how do you see that consciousness opening up so that perhaps that negativity that is attached to it. You know becomes a little more.
George Mancheril: yeah yeah I mean look at the end of the day like I don’t think there’s any any product out there that has 100% of everyone’s support across the board and it definitely is an evolution and an unlearning of a lot of what was.
Alejandro Cremades: It disappears you know and there is more of openness towards it. So.
George Mancheril: Parroed out in during cannabis’s prohibition phase but I think really the proof is in the pudding right? You have so many markets now you have over 50% of the states of the us that have some form of legalized cannabis whether it’s medicinal or adult use you have about I’d say 2 thirds of of you know the. Us population that believes that legalization should happen. So I think there’s definitely been a lot of you know, living with cannabis proving that this isn’t going to be the end of times or the end of civilization that a lot of a lot of individuals just need to see in practice right? and now even on the financing side. You know New York has just started. You know their adult use. Sales’s very limited. It’s running behind schedule. But what we’re seeing even from the first couple days is that there’s huge pent up demand and I think there’s a little bit of seeing cannabis and the cannabis industry thrive in your locality and within your state that does a lot of the convincing right? there just so and then. Add on to it. The benefits that your local community or your state can enjoy from the added tax revenue that it’s getting from this new industry the job growth that it offers to your community I think all of these positives are you know, very hard to really visualize. The abstract. But once you see it in practice. It. But it just becomes that much more real and that much more convincing.
Alejandro Cremades: And as you’re thinking about growth too and and and how things tend to change. How will you say that you guys have developed and and scaled up the technology side of things.
George Mancheril: Yeah I mean I think you know on our side. We’ve seen technology play an increasing role over the past two years just within our own operations and you know one one exciting part about cannabis is growth and ramp is that you know it’s happening now in the modern era. And it’s and it’s a cpg industry that can really take advantage of technology and really how the modern consumer operates in a way that other previously existing industries had to unlearn past ways of operating and then learn new ways and so for us we’ve. Prioritized you know how can we be more efficient remove friction points. You know, really be a financing partner. But also you know a true just tool and and service for this industry and the operators within it to scale their growth and I think when we look back at what we’ve done over the past two years it’s understanding both on a. Macro level. How the industry’s progressing what supply is doing what’s happening on pricing there’ve been a lot of different micro shocks that each state and each market have had to encounter and really I think the exciting thing for cannabis operators is that the fact that there’s so much technology that has been. Built out around cannabis really what? this ultimately does is empower them to make smarter decisions and that’s something that we’ve leveraged when it comes to making our application process as simple as possible and you know getting financing in a very short period of time out to the borrowers who need it all of these are.
George Mancheril: Directly enabled by technology and that’s really where our focus would be going forward to understand how we can make this more convenient and more broadly available for other markets.
Alejandro Cremades: Now you guys are combining 2 areas that are you know, quite challenging. You know on a one end. You know you’re dealing with a very heavy regulated space. You know they kind of is space but then also the financing side of things you know also has you know it’s quite a regulation so you got double the trouble here. So so how ah, how how have you guys you know, really thought about that you know from the beginning.
George Mancheril: Yeah I mean it’s that’s a good question because you’re right? Um, cannabis regulation is a state by state consideration each state sets up its own rules because again federally it’s illegal and financing rules. Follow the same framework. It is a state by state consideration in terms of. How you have to operate as a lender whether they’re licensing requirements and you know sort of other limitations on what lenders can or cannot do and so for us when we look at a new market you know and by market we mean state. It requires a lot of due diligence on our side both in terms of understanding both spheres and really making sure that our products work. Ah, process works. Um, you know there is that there’s enough of a cannabis market there that you know can actually benefit from financing and benefit from scaling up and so a lot of this a lot of that analysis happens before we go live into any any state and as of today you know we have borrowers in over 18 states across the us and so. It’s a process that we’ve gotten very used to running through as the opportunity presents itself. But the good news is that you know because of our growth and because of our brand. Ah you know presence within the market now a lot of our geographic expansion is driven by reverse inquiry. You know we often get approached by operators and states. Where we haven’t been active before um to see if there’s any way for us to work together and so that’s been a good evolution versus you know the early days of our our existence where we would really just focus on which markets we should prioritize from an opportunity standpoint.
Alejandro Cremades: And now for the people that are listening to get an idea on their scope and size anything that you feel comfortable sharing maybe like number of employees or anything like that.
George Mancheril: Yeah I mean we’ve always run I’d say pretty lean over here. But you know we’ve we’ve basically increased our head count by 50% last year you know it’s about thirty thirty so employees at the company right now and for us, you know it’s not really a question of of headcount. It’s more about you know what? we’re able to do and so. This is where our technologies really helped us sort of scale operations in a really efficient manner for us. You know growth is all about how much financing we’re doing and you know just by last year you know we had. We had financed over. You know one point eight billion dollars in in cannabis gmv since our inception and so that was definitely. Ah, big milestone and reflective of a lot of years of of hard work and for us you know we just see the opportunity set growing. Um, you know the amount of cannabis that consumers are buying is only increasing even in quote unquote mature markets like California um, you’re seeing that there’s actually more demand for the product than there was last year and so for us. The pie is just getting bigger and for us the idea is how do we make sure that we’re there to service an increasing portion of it. Um, just given that there is so much growth on both ends.
Alejandro Cremades: That’s amazing now. Imagine if you were to go to sleep tonight George and you wake up in a world where the vision of the company is fully realized what does that world look like.
George Mancheril: I don’t know that there is ever a final point. Um, you know everything does kind of build and evolves and you know the work that you do does open up new opportunities I mean even for us when we you know first started our operations. The idea was you know, address this working capital financing need in the industry and. After 2 years of of doing this in a pretty manual way what we realized is there’s an opportunity here incorporating technology and going with a more scalable effort and I think as the industry matures the needs of that industry are going to evolve and change even beyond financing and so for us. A lot of a lot of our brainstorming and our ideas are driven by what we hear from our borrowers and from our our clients really, it’s just like what are they trying to take advantage of what are we they seeing in terms of changes within the industry and so you know realistically um I don’t have a final form in my mind but what would be very very. Good would be for us to really execute in terms of what our core mission is and really we look at ourselves as a partner for the cannabis industry. So if we’re out there enabling entrepreneurs to really capitalize on their vision and actually scale their businesses and grow. Then. We will have done everything we wanted to do from our mission statement and that can take the form in a variety of different ways even beyond just strictly financing products.
Alejandro Cremades: Amazing now as we are you know here? we’re talking about the future a little bit but if we’re looking towards the past and we’re able to reflect from it. You know, imagine you had the opportunity of having a chat with your younger self maybe that younger self that is still you know in the in the finance. You know, um, segment you know working still at Guggenheim and you were able to you know just have a chat with your younger self and being able to give that younger George 1 piece of advice before launching a business. What would that be and why given what you know now.
George Mancheril: It’s a loaded question. Um in in the effort of making this more relevant for more of your audience I mean for me I think one of the biggest lessons has been you know strength of conviction. Um, you know, really just understand what’s most important, what are the goals and. What are you trying to achieve in a very clear framework and really using that as a way to prioritize because look There’s always going to be volatility. There’s always going to be. You know the the consensus opinion about what the right thing to do is or what to prioritize? um or what reality even looks like right and I think. Especially going into into you know cannabis during what was you know I would say a boom market across the board when when it comes to startups. There’s there’s a general optimism and consensus that oftentimes goes unchallenged where internally we’ve always been slightly on the more pessimistic side in terms of There’s real challenges in growing any business from 0 to 1 and growing an industry from 0 to one and I think it behooves everyone to keep that in mind and so for the first couple parts of our our existence. You know we always kind of felt like the Debbie Downers in some conversations like you know, hey maybe the future is not going to be as. Perfect or as rosy or as easy as as people are expecting and a lot of those challenges have materialized um, a lot of unexpected challenges have materialized. But I think ultimately that doesn’t diminish from the core optimism that we have in terms of what this industry will ultimately be and even what it’s gone to today and so.
George Mancheril: I think just having strength of conviction in terms of your best educated guests and at the same time being open to new data new information that better informs you as things change. It’s something. That’s very hard to do especially when you’re in what could be a bull market what you can be in now which is a very bare market where everyone’s pessimistic I think we’ve actually. Flipped our roles where general consensus is pretty bearish and pretty bleak and for us this is where I think the silver linings of the optimism really shines out on our side where we know there’s a future and so the opportunity remains you know it’s it’s going to be It’s always it was always going to be a challenge to get from point a to point b but. The the fact that we’ve actually been resilient as an industry and continued to grow for us. It actually makes it more exciting now to like retackle just based off of the experience. We’ve built up over the past few years
Alejandro Cremades: I love it so George for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.
George Mancheril: Yeah I mean I would say you know go please go to our website. Bespokefinancial.com um, and you know there’s easy options to reach out to us or where our team is happy to get back to you and you know please do reach out. We like to take a very you know. Consultative approach and a partnership approach when it comes to working with cannabis operators within the space and so anyone who’s interested in learning more about our services. You know, reaching out is always the first step and then we’re happy to get in front of you and get you the information you need and ultimately you know work towards getting you as many. Financial tools is possible for you to scale your business.
Alejandro Cremades: Amazing. Well hey George thank you so much for being on the deal maker show today. It has been an honor to have you with us.
George Mancheril: Thank you Alejandro.
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