CANNAINVESTOR Magazine October / November 2016 - Page 121

Venegas speaks about the similarities between working in frontier markets and the cannabis industry frequently. Having lived and worked in multiple emerging and frontier markets, Venegas characterizes his experience in the cannabis industry as being similar to “watching a movie I’ve seen before.”

He states, “I have focused extensively on emerging markets, and even beyond the emerging market profile, to frontier markets. These have a lot of risks that are difficult to ascertain, where standard due diligence practices are not sufficient for making an investment in an intelligent way. Information is very limited, and capital is scarce and consensus driven.”

Venegas believes that his experiences in frontier markets have prepared him to be competitive in the cannabis industry on every level. “We have a different operating model from most of our competitors. We’re much more information and data-focused in the way we serve our clients. In frontier markets, you can’t rely on cultural norms or traditional sources of information because they often don’t exist or function in a familiar way,” says Venegas.

According to Investopedia, frontier markets are defined as “less advanced capital markets from the developing world. The frontier, or pre-emerging, equity markets are pursued by investors seeking potentially high returns who are able to accept the higher risks these type of markets would be exposed to. Some of the risks investors face in these frontier markets are political instability, poor liquidity, inadequate regulation, substandard financial reporting, and large currency fluctuations. Frontier market investments can have a low correlation to developed markets and thus can provide additional diversification to an equity portfolio.”