Business

Fyllo Raises $10M, Aims to Expand Beyond Weed

By Hilary Corrigan Aug 21, 2020
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Fyllo, a Chicago-based software firm that provides compliance services and aggregates data on cannabis consumers, recently raised $10M. It aims to grow beyond cannabis into other regulated areas such as pharmaceuticals and gaming.

Fyllo is a marketing technology firm. It aggregates cannabis consumer data that mainstream sectors can use to target consumers with digital ads. It also offers software and services that help cannabis companies ensure they comply with various regulations. Fyllo expects its platform, with compliance solutions and a database of regulations, could serve other regulated industries, as well.

For cannabis companies, the company uses compliance software with AI and image recognition to determine whether labeling content meets standards. Law firms and MSOs use it to understand local markets and rules like those related to packaging and labeling, and zoning for real estate. 

Fyllo’s data marketplace aggregates cannabis data from delivery services, loyalty programs and e-commerce platforms. Mainstream brands and marketers in clothing, fast food and sectors can access cannabis consumer data to target their own ads to that large—and for them, new—audience. For instance, they might target certain CBD buyers with ads for fitness and athletic goods.

Existing investors JW Asset Management and K2 & Associates led Fyllo’s recent Series A2 financing round, bringing the company’s total fundraising to $26M. In a press release, Jason Klarreich, managing director of JW Asset Management, called Fyllo “one of the first companies to build an enterprise solution for cannabis that will ultimately be brought to bear on other highly regulated industries.”

In a press release, CEO and founder Chad Bronstein noted the “rapidly increasing acceptance and consumption of cannabis and CBD, and the opportunity for brands to build relationships with a massive new customer base.” Bronstein also stressed a need for marketers and legal professionals to keep up with compliance and consumer demand. 

‘Huge opportunity’

Bronstein, who has a marketing and technology background, said he “saw a huge opportunity in the cannabis space” when he started Fyllo about a year and a half ago.

Earlier this year, Fyllo acquired CannaRegs, a web-based subscription service and technology platform with access to state and municipal cannabis regulations. For several years, CannaRegs has collected regulatory data on cannabis, CBD and hemp at state and municipal levels. Its CEO, Amanda Ostrowitz, joined Fyllo as chief strategy officer.

In a press release at the time, Bronstein noted the cannabis industry’s growth. “Digital advertising is the industry’s clear pathway to growth, and brands need to have confidence” that their ads reach the right audiences while also meeting state and market compliance rules. He called CannaRegs the “go-to market leader” for such compliance data, saying Fyllo’s technology helps provide information at scale.

Earlier this summer, Fyllo announced partnerships with Eyeota and Lotame to facilitate the sale of cannabis-related consumer data. That includes consumer profiles and audience information, so marketers can overlay edible, sativa or recreational cannabis purchasers with traditional audiences of hiking enthusiasts, fast food eaters and wine drinkers.

Fyllo touts the Eyeota partnership as a way to connect cannabis market data with those other types of mainstream fields, like retail, fast food and health. Fyllo praised the Lotame partnership as a way to give mainstream marketers “previously inaccessible audience data.”

Because of cannabis’ and CBD’s mass appeal and availability, “consumption is defying traditional stereotypes,” Fyllo stated. The company stressed a chance for mainstream companies to access that cannabis customer data and “recruit new customers of all lifestyles and life stages.”

Growing market

Bronstein sees value in getting information out to those other industries and marketers about the large number and wide variety of cannabis consumers. “There’s an audience there,” he said.

Fyllo has about 70 employees now, with offices in Israel, Colorado, New York, Illinois and California. The latest financing round’s revenue will help hire more people, including in engineering, sales and marketing. The company could have about 90 employees by January.

The pandemic has worked out well for the cannabis industry, in general, especially since it got an essential designation status in nearly every legal state. “It’s helped us,” Bronstein said. “We’ve grown in revenue month over month.”

He also expects to expand Fyllo’s platform into other regulated markets.

No lulls with cannabis

K2 & Associates Investment Management Inc. started investing in Fyllo early on, and K2 Vice President Adrian Morante called the company’s growth “mind blowing.” But so is the industry’s. Morante called it one that’s prosperous in good times and that has strengthened in bad times. Unlike the restaurant and travel industries, it has not seen a lull, he said.

“The Googles and Facebooks of the world” have not entered this space, Morante noted. But Fyllo is “building sort of this platform” that helps those outside the industry get comfortable in dealing in it.

Morante likes that Fyllo “can bridge the gap” with technology, data, advertising and cannabis. “I just initially loved the theme and the team,” he said.

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