Tiger Global, the investment firm that poured money into Facebook, Warby Parker and Flipkart, is now betting on cannabis alongside rapper Snoop Dogg.
Green Bits, a developer of compliance software for marijuana businesses, said Wednesday that New York-based Tiger Global led a $17 million investment round in the start-up. Tiger Global was joined by investors including Snoop Dogg's venture firm, Casa Verde Capital, which first backed Green Bits last year.
It's a stretch for Tiger Global, a firm that made a big splash in Silicon Valley in the early part of the decade by investing in Facebook and LinkedIn ahead of their IPOs and by placing late-stage bets on other internet companies. Tiger's public investments include Amazon, Alibaba and Netflix.
"They have that background that will help us build a powerhouse technology company over the next few years," Green Bits CEO Ben Curren told CNBC.
However, Tiger Global's name has been less prominent of late, and the firm is no longer routinely seen in the most high-profile financing rounds. Meanwhile, Japan's SoftBank has stepped up its dealmaking, most notably with its $100 billion Vision Fund that was announced in late 2016. In February, Rajeev Misra, CEO of the Vision Fund, told CNBC that the fund plans to invest in about 100 technology companies.
Still, when an established investor like Tiger taps into cannabis, it lends a measure of credibility to a particularly risky corner of the start-up market.
"In terms of helping the industry continue to gain a lot of mainstream attraction, I think this is a really significant step in that direction," said Karan Wadhera, Casa Verde's managing partner. "We've always said it is only a matter of time before more traditional investors start looking at the space."
Casa Verde, which Snoop Dogg founded in 2015, specializes in funding early-stage ancillary marijuana companies. Although Wadhera declined to disclose the exact size of Casa Verde's investment in Green Bits, he said it marked the firm's "biggest single check to date."
"We want to be backing great entrepreneurs who are looking to build something really exciting in the cannabis space," Wadhera said.
Green Bits develops point of sale software for pot shops and dispensaries. Its technology handles seed-to-sale tracking, customer sales limit enforcement and inventory reporting, all with a simple interface.
Compliance is "complex and onerous for these dispensaries because you basically have to report back on a daily basis the movement of all the product," Wadhera said.
Curren is no stranger to the software industry. He spent years developing compliance software for companies like Intuit, before co-founding Green Bits in 2014. The product is now used by more than 1,000 dispensaries across 12 states and processes more than $2 billion in transactions per year.
Curren said the company plans to use the fresh capital to expand the workforce, promote growth at the retail level and push deeper into the formal finances of the emerging industry.
"We want to move from cash into electronic payment, and then also provide the data necessary to bank, so we can bank the industry at scale," Curren said.
While many venture firms are still staying away from cannabis investments, the broader market is seeing plenty of momentum. Former House speaker John Boehner announced last week that he's joining the board of a marijuana holding company, despite previously opposing the drug. And last month Senate Majority Leader Mitch McConnell pushed to legalize the farming of industrial hemp.
Wadhera said that it's the right time to be investing in technology.
"We want to be investing in companies that are going to be there for the life of the industry and continue to grow and develop it — not get replaced immediately when federal legalization takes place," he said.