The cannabis sector has seen significant developments in 2022, with Óskare correctly predicting a range of market events and sentiments, several are outlined below.
One of our key predictions that was realised last year was the increased involvement of big pharma in endocannabinoid medicine. In March 2022, we saw Pfizer acquire Arena Pharmaceuticals for $6.7 billion, indicating a growing interest in the potential therapeutic benefits of cannabis from large corporates.
Continuing this theme, Óskare also correctly predicted the entry of a corporate venture fund into the European medicinal cannabis sector – DSM Ventures invested in Octarine Bio in Q3 2022.
Last year we also predicted an initial rebound in public cannabis stocks followed by a broader correction, creating a stronger and likely sustained buyer’s market. Again, we saw this play out in 2022 with growth in cannabis stocks in Q1 2022 yet by December there was a decrease of 50% (approx.) in average market cap.
Following public sentiment we also projected a levelling out of private market capital inflows, which has increased companies’ reliance on incumbent funding sources. Indeed, disclosed private rounds saw funding fall from $1.4 billion in 2021 to $500 million in 2022. Arguably, this has led to a more stable and realistic funding environment for companies in the medical cannabis sector, allowing them to focus on long-term growth and development.
As a sector specific VC firm, we are actively involved in the industry we invest in and have a vested interest in its success. We are proud that all but one of our predictions have come to fruition, with the final prediction likely to be realised in 2023.
Their projections are not only based on our market insights but also on our commitment and involvement in the companies in which we invest. This aligns our interests with the industry and incentivises us to make thoughtful and well-informed decisions for the benefit of both our investors and our portfolio companies.
Read our January Newsletter for our 2023 predictions!
Author: Henry Williams, Intern Analyst, Óskare Capital