In this blog series, entrepreneurs share their venture capital experience. From funding to mentorship, we’ll take a look at how Elevate Capital invested in their success. We recently sat down with Ana Andueza, CFO of PacLab Analytics.
Are you breaking into a new industry? Hear what Ana has to say about her experience as a CFO at a cannabis testing startup.
Tell us the story you’ve told a thousand times. How did PacLab Analytics get started?
PacLab Analytics is the creation of Ralph McCarthy. Ralph was an engineer at Intel Corporation testing microprocessor chips. When cannabis was legalized in Oregon in 2016, he thought it was a great opportunity to apply the technology and processes he learned at Intel to a new industry. He left Intel and started his dream.
What compelled you to become involved in PacLab Analytics?
I met Ralph about a year ago when he was getting ready to validate the business. Ralph asked me to come to the lab and run a financial model. So I did.
As we were putting the numbers together, we realized what a huge opportunity this was in the cannabis testing space. It’s a brand-new industry and there were very few players in it. As things came together, we started raising capital. We found out there was quite a bit of interest in this space. So it was just one foot in front of the other, one step at a time.
We’ve launched two labs—one in Hillsboro, Oregon and one in Oakland. Now we're ready to go revenue-positive in California and then look to expand.
When you were a child, what did you want to be when you grew up, and how did that dream turn into this one?
I didn't really have any dreams of what I wanted to be when I grew up. I grew up in a very small town in eastern Oregon. The only thing I remember is playing "office" a lot, having a desk and shuffling papers. Now I'm a CFO, and I sort of do the same thing but in a grown-up way.
I didn't really have a concept of startup companies or wanting to be an entrepreneur. I always wanted to work with numbers and people, so PacLab Analytics was a good fit for me.
Tell us about PacLab Analytics.
PacLab Analytics is a cannabis testing laboratory. Cannabis is now legal recreationally in nine states and legal for medicinal purposes in 29 states. In the states where cannabis is legal, before consumers can consume it, it needs to be tested by a validated lab. PacLab fills that need in the market.
I think back to the Gold Rush. The folks who made all the money were the ones who sold the miners the picks and the shovels. Levi Strauss got its start selling jeans to the miners. PacLab Analytics is a necessary compliance piece for the cannabis industry. It's not cannabis, it’s cannabis-adjacent.
What seemed like the impossible challenge when you were in the early stages of PacLab Analytics?
One of the things I thought would be harder than it has proven to be is getting equipment financing for our operation. A lab is no trivial matter. It costs about a million dollars in equipment to set up. The instrumentation is specific and expensive.
Generally, startup companies are not able to qualify for financing because of the lack of revenue or lack of years in business. However, we have found that in our space, the equipment financing has been fairly easy for us. The equipment itself has great value, so banks are eager to lend equipment that has a lot of collateral value.
The manufacturers of the testing equipment sell their equipment to labs of all sorts—blood testing labs, food labs, water labs—and they want to validate their equipment for the cannabis industry. They were excited to partner with us, because they knew we were familiar with the equipment, and that we would give them feedback on how their equipment performs in this new market.
Can you share an aha moment for your first year in business?
The biggest “aha” moment has been the difficulty in creating real estate spaces for our laboratories. We’ve encountered a lot of trouble getting permits and contractors there on time. It’s difficult to put the pieces together given the boom in the construction industry all across the country.
Running a company can be tough on work-life balance. Do you have any rituals that help you stay healthy and productive?
Working in a startup involves a lot of hours, and it can be stressful at times. I definitely try to get my sleep and exercise, get rest and get away from the office to turn it off. I feel that a rested person is a much more productive person, so I make that a priority.
Elevate Capital works with underserved entrepreneurs, such as women and minority-owned startups or those living in areas with fewer business opportunities. What are some of the challenges underserved populations might experience when launching a startup, and how can they overcome it?
The largest problem startups founded by women and underrepresented entrepreneurs face is access to capital. It’s been proven that women and people of color are just as successful—if not, more so—than the traditional startup founders who have had an easier time getting money to start their companies.
It’s in the news all over the place. It’s why Nitin launched Elevate.
Why did you decide to put your trust in Elevate Capital to fund PacLab Analytics, and what was the experience like working with Nitin Rai and the Elevate team?
I have known Nitin for a number of years. I knew about the Elevate Fund and the Inclusive Fund, and I really loved what he was doing. When I met Ralph, one of the things that we talked about is fundraising, and I said: “I have to introduce you to Nitin, because I think this would be a perfect fit.”
I talked to a couple of Nitin’s investees—Ana Chaud from Garden Bar and Paula Hayes from Hue Noir—and asked about what the process was like and what Nitin was like to work with. And I got glowing reviews. I knew I would.
Nitin is very supportive of entrepreneurs. When he came out to do due diligence, he really got in deep himself. He didn’t send a team...he came himself. He toured our facilities and understood the opportunity very quickly.
It was very easy to communicate the plan and the vision to Nitin, and show him how it was all going to roll out. The write-up that he provided then helped us to secure additional financing. Once Nitin is on board, then a lot of other people become much more interested in you.
Venture capital is, of course, important for a startup, but so is having continued support. What specific type of mentorship have Nitin Rai and the Elevate team provided to guide you towards success?
On the mentorship side, it’s been amazing. I would say the most important thing Nitin has provided is contacts and connections in the market. He has introduced us to potential customers, support people, and more investors. Nitin has put us in front of TiE Global.
Nitin has been there to support us in every way. When I call him, he answers. He has great advice. He’s unflappable. Startups have a lot of ups and downs. He’s always calm and collected, asks the hard questions, listens to your answers, and makes you walk a tough line sometimes too.
How has networking with others into Portland and Greater Oregon community helped your business?
Networking in Portland has been very strong. I’ve been part of the angel community for five or six years now, and I find the environment here to be very supportive. There are lots of folks who are willing to introduce you to other people, set up coffees or lunches or other opportunities for meetings. Portland is a great place to start your business.
If you were in an elevator with another aspiring entrepreneur and you only spent five floors together, what lasting piece of advice would you give them?
Never quit. Startup life is hard. The ones who survive are the ones who get up every time they’re knocked down.
Did Ana inspire you to break into a new industry? Apply to get support from Elevate Capital.