Seed Commodities Exchange (Seed CX) has announced on Tuesday securing $3.42 million fund for its venture capital round. The commodities trading platform for industrial hemp has to sweat a lot to raise fund for its yet to be launched startup business.
The investment has been analyzed as another step forward towards launching hemp derivatives. The Chicago based trading platform has applied to the US Commodity Futures Trading Commission to become a trading venue for financial contracts on industrial hemp. The marijuana cousin is found in products such as fabric, shampoo, plastics, building materials and food, reports Financial Times.
However, raising the fund hasn't been so easy. Edward Woodford, co-founder of Seed CX has sent 11,000 emails, travelled 46,238 miles and met 604 investors for raising the first round of funding. Woodford has sent so many messages in LinkedIn that attracted a ban from the service, reports Fortune.
Intriguingly, many of the company's 50 investors have declined to make their names public. The lead investors include Charlie O'Donnell of Brooklyn Bridge Ventures, Darren Herman, Tom Sosnoff, 500 Startups and others. Seed CX's goal is to use derivative tools to cultivate financial security in emerging agricultural markets, with idiosyncratic risks. It focuses on providing innovative means to secure operational stability for hedgers and new trading opportunities for speculators, reports Automated Trader quoting Brian Liston, President and Co-founder at Seed. Presently, Seed CX operates in areas with recent regulatory transforms aiming to new or obscure markets. Its launched products include new weather derivatives and industrial hemp swaps options and forwards. The trading platform is powered by GMEX Technologies, a London-based subsidiary of financial technology company GMEX Group. The startup expects to run by the farming season starting in May, with its first commodities- hemp seed, whole hemp plant and plant extract. Many farmers in Kentucky have started growing and processing hemp due to slashing subsidies for tobacco. Currently there are 100 hemp farmers and 150 processors in the US. Hemp farming and processing is federally legal under the Agricultural Act of 2014, but only in states with the proper infrastructure. Kentucky and 26 other states consider hemp farming and processing as legal. Hemp itself is legal in everywhere. Woodford, however, hasn't disclosed how many farmers and traders have nodded for Seed CX platform while running operations with legal endorsement.
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