Although some form of marijuana is legal in 36 states not all members of the mainstream business world accept that reality. This became more apparent after MassRoots Inc. (MSRT) presented at TechCrunch’s Startup Alley competition in New York. At this competition entrepreneurs showcase their respective products to an audience who votes for the company that is the best startup.
MassRoots easily won the competition. The company received around 5,000 votes -five times more than its next closest competitor. MassRoots, however, was told that they cannot advance to the next round because its technology and user community are “not significant” enough.
Typically, the company who receives the most votes gets the opportunity to compete for $50,000 at a larger competition called Startup Battlefield. Instead, the spot was given to the second place competitor who had received less than 1,000 votes.
A TechCrunch editor told MassRoots that the company would not be given a presentation spot at Startup Battlefield without explaining the basis for their decision. Technical420 reached out to TechCrunch to find out why they would not allow MassRoots to move on but they did not respond to any of our messages.
MassRoots CEO Isaac Dietrich said that TechCrunch dismissed MassRoots because it is a small company that is not backed by a large investment fund and because the company fully embraces the marijuana consumer culture. Dietrich said that TechCrunch did not like how he represented the technology industry. Dietrich is a young entrepreneur who dropped out of college and is a cannabis user.
Marijuana companies get a bad rap
It was surprising to hear this news because the technology industry has shown great willingness to work with and fund cannabis companies. Dietrich was surprised by the decision made by TechCrunch and was not shy about voicing his opinion.
Dietrich said “All MassRoots was asking for was an opportunity to compete in the Startup Battlefield. Had we lost Battlefield based on our merits, that would have been fine, but to deny us the chance to tell our story on the main stage because I’m an unabashed cannabis smoker is nothing more than thinly veiled discrimination against the cannabis community.”
He added, “TechCrunch’s denial is a sign of continued inequity against some businesses within the nascent industry.”
The cannabis industry had a significant presence at TechCrunch
One of the speakers at the competition was Brendan Kennedy, CEO of Privateer Holdings, a private equity firm that operates several cannabis companies. Privateer owns a portfolio of companies which include: Tilray, a Canadian medical marijuana producer; Marley Natural, which is a joint venture between Privateer and Bob Marley’s heirs; and Leafly, which is the Yelp of the marijuana industry.
Privateer Holdings recently closed a $75 million Series B round of funding. One of the investors was the Founders Fund, a venture capital firm led by Peter Thiel and 3 other partners. Kennedy spoke alongside Geoff Lewis who is a partner at the Founders Fund.
Dietrich said, “Brendan and Geoff are awesome and are definitely welcome in the cannabis community, but that doesn’t give TechCrunch a pass to completely ignore the votes (we) received. We were stoked because this was the opportunity of a lifetime. It was our chance to tell our story to every Silicon Valley executive in the room.”
Many people upset by this decision
Many people were upset over the decision made by TechCrunch and voiced their opinions on social media. MassRoots earned the opportunity to present at Startup Battlefield and it is a shame that they will not be able to do so. The company would have been able to present their business to the Battlefield panel which includes Dennis Crowley of Foursquare, Alfred Lin of Sequoia Capital and Rich Miner from Google Ventures.
TechCrunch’s Instagram account was getting blown up with comments that favored MassRoots. A number of people scolded the organizers of the competition for awarding the Startup Battlefield spot to the second-place competitor.
“The point of TechCrunch Disrupt is to discover companies who are pushing boundaries, creating new markets and, ultimately, changing the world,” Dietrich said. “By any objective standard, MassRoots should at least have been given the opportunity to compete.”
MassRoots (MSRT) went public last month and a victory at this competition would have served as a catalyst for the company. MassRoots, however, is now at the center of a controversy in the business world which has created awareness with some of the top venture capital firms. These firms will hear about what happened and we expect to see some of them invest in MassRoots.
MassRoots has one of the largest and most active social networks in the cannabis industry. They have over 275,000 registered users and they have created relationships with a number of leading organizations in the cannabis industry. MassRoots is not going anywhere, the company continues to grow its user base and execute on business initiatives. We are excited to see what they do next!