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LYPHE Group Poised For European Expansion As It ‘Steps Into Venture Capital’ With £5m Fundraise Led By Leafy Tunnel

LYPHE Group has announced the successful closure of its latest funding round, securing £5m in capital to fund expansion into ‘multiple markets’ across Europe. 

The funding round has seen the company ‘step into venture capital’ for the first time, thanks to the involvement of early stage medical cannabis and psychedelics venture capital fund Leafy Tunnel, which led the round. 

Leafy Tunnel, which now counts LYPHE Group as its eighth investment in the space, told BusinessCann that ‘now was the right time’ to invest in the business, which it believes is now poised to replicate its market-leading model outside of the UK. 

Funding Round

The £5m Series A funding round saw leading US cannabis advisory firm Sharp Capital Advisors, alongside a syndicate of high-net-worth investors, join Leafy Tunnel in investing. 

According to LYPHE’s recently appointed CEO Jonathan Nadler, the financing is ‘critical’ for the company to ‘execute our scale-up plans’. 

These include bringing its vertically integrated business model, which covers everything from the importation, manufacturing and wholesale of medical cannabis to digital patient-facing operations, into new markets like Switzerland, Australia and Germany. 

According to Leafy Tunnel’s co-founding partner Bek Muslimov, the venture capital firm has been ‘following’ LYPHE’s progress since he first met with its management team in 2019.

Since then, the company has seen significant growth in patient numbers thanks to its digital telemedicine division The Medical Cannabis Clinics (TMCC), which now caters to more than half of the UK’s entire medical cannabis patient base, which according to the most recent figures from Prohibition Partners’ grew 425% last year to 23,466.

Last year, LYPHE announced plans to ‘disrupt the monopoly arrangement’ of medical cannabis in Switzerland by launching a new patient clinic dubbed MEDCAN Praxis. 

The company’s venture into the highly regulated Swiss market comes ahead of new laws allowing prescriptions without special approval, due later this year, which is expected to see patient numbers rise to 100,000 by 2023. 

Right Time to Invest

After successfully proving its business model in the UK, consequently helping LYPHE’s revenues last year jump 250%, Mr Muslimov said he reconnected with the company to explore their future ambitions. 

“We reconnected with them last year to start having a conversation about their plans, and we thought that the company was now ready to take on institutional capital to scale their plans and accelerate growth not only in the UK but across Europe.”

“One of the main contributors to our decision to invest in the company was that it is the largest in terms of the patient count in the UK owning almost half of the market share. 

“The countries they are aiming to expand in, the way cannabis is administered is similar to the UK. So the business model that they were able to nail in the UK, seems to be replicable in the markets it’s targeting.”

The funding also coincides with some significant changes to Lyphe’s management team, including the appointment of Mr Nadler as CEO in December, alongside the appointment of Brian Fisher, James Scarth, Christopher Ashton and Bradley Morris as directors over the past few months. 

According to Leafy Tunnel, this newly strengthened management team was a further reason for their investment. 

“Jonathan is the right person to lead the company, and the fact he is the CEO changed the dynamic of our decisions. When we decide to invest we back founders and the management. So for us, it was key to our decision. 

“We look forward to supporting the management in achieving LYPHE Group’s next milestones.”

Mr Nadler told BusinessCann: “The innate potential in cannabis has been spoken about for millennia. Finally Medical Cannabis is seen as a revolutionary drug that holds the ability for so many patients to live better lives. 

“And, we are at the forefront of this movement, building the access and supply chain for frictionless treatment and care. As leaders in the UK, we now look to continue our refinement and scaling of every element of the supply chain that we touch. Thank you to our investors for their belief in our purpose.”

LYPHE Group was founded in 2018 shortly before the UK government legalised access to medical cannabis. Serial entrepreneurs, Rob Reid and Stephen Murphy, remain the largest shareholders of the company today. 

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