Over the past decade, we witnessed a groundbreaking era of democratized access to alternative investments.
Not long ago, it seemed unthinkable that individual investors could ...
1/ The big story for #FinTech in 2021?
⏩ Alt Goes Mainstream ⏪
How did we get here? Who are the players? Where do we go next?
Thread 🧵below 👇
And check out Substack for how the confluence of a number of trends will change investing as we know
Over the past decade, we witnessed a groundbreaking era of democratized access to alternative investments.
Not long ago, it seemed unthinkable that individual investors could ...
made that possible.
💸 invest $20 alongside Sand Hill Rd VCs into a fast-growing startup. @joinrepublic made that possible.
🏦 invest alongside endowments into a top private equity fund. @icapitalnetwork made that possible.
People can now invest in everything from classic 🚗 to 🎨 to 🏀 & 🏈 cards thanks to democratized access to investing in real things.
If there's any cohort of people who view culture as a financial asset, it's Millennials and Gen Z.
https://t.co/ERJjxfR9gJ
Never invested in illiquid assets before. So I put a small amount of money in @OnRallyRd.
— \U0001f6d2\u26fd\ufe0fJelani (Jay) (@jelanisince94) January 4, 2021
Pretty cool to open up the app and see one of the investments exited and I made a profit.
Alternative asset asset investing is cool.
https://t.co/8pStWRHmFM
You can go on @stockx and buy or sell a rare Air Jordan shoe just like you'd do with a stock.
.@OnRallyRd is the new SNKRS app. Everything you want, but always unavailable cuz the hype is too real. pic.twitter.com/4ANHwnvz3q
— marco marandiz (@allthingsmarco) December 25, 2020
https://t.co/QeIt5cCy5q
The culmination of a number of trends in private markets has made it palatable for investors to put money into alternative assets.
👇👇👇
Online investment platforms like @RobinhoodApp made one-click investing seem normal.
Alts platforms like @joinrepublic, @icapitalnetwork, @AngelList, @FundersClub have made alts both investable - and even tradable in some cases.
Crowdfunding regulations have enabled investors to access private markets.
The JOBS Act enabled private companies to complete securities offerings that allow them to raise up to $1 million from non-accredited investors.
We've been mired in a low interest rate environment since the Great Recession.
Where do investors go in their search for yield? Alternative and uncorrelated assets that might be higher risk, but can also be higher reward investments.
Other than cloud stocks & a few other companies, the equity markets were relatively boring for individual investors pre-COVID as passive ETF investments became the norm.
The market responded by bringing forward timeline for attractive IPOs & SPACs.
Private companies staying private longer has shifted the value creation event for investors to private markets.
Investing at Microsoft's IPO? 4,800x return.
Investing at Facebook's IPO? 7.6x return.
Never before have investors been able to marry their interests with their investments in such a direct way.
Chicago Bulls fan? Go @OnRallyRd & invest in 6 Bulls Championship Rings. And stack gains too 💸📈
https://t.co/8pStWRHmFM
.@OnRallyRd is the new SNKRS app. Everything you want, but always unavailable cuz the hype is too real. pic.twitter.com/4ANHwnvz3q
— marco marandiz (@allthingsmarco) December 25, 2020
We are seeing a rise in influencers - athletes, creators, artists.
These influencers are able to direct their followers to buy, use, or invest in things they promote, which is now likely something they are also invested in.
Alts are as palatable an investment to Millennials and Gen Z as stocks and bonds have been to Baby Boomers.
One of the most interesting features of alt platforms is that platforms which aspired to democratize access ultimately ushered in new forms of institutionalization over time.
Retail is usually at the forefront of these new asset classes.
Then, institutional participation begets more retail demand.
The first wave of alt investment platforms democratized access to assets that were already the domain of institutional investors.
This wave of alt alt assets have had very little institutional investor participation to date.
👀 Crypto and #Bitcoin to see what the arc of institutionalization will look like w/ trading cards and collectibles.
So, could we expect a similar story to play out with cultural assets?
HNW community remains structurally underallocated to alts. HNW have 1-5% to alts vs 20% for institutions.
More from Tech
The 12 most important pieces of information and concepts I wish I knew about equity, as a software engineer.
A thread.
1. Equity is something Big Tech and high-growth companies award to software engineers at all levels. The more senior you are, the bigger the ratio can be:
2. Vesting, cliffs, refreshers, and sign-on clawbacks.
If you get awarded equity, you'll want to understand vesting and cliffs. A 1-year cliff is pretty common in most places that award equity.
Read more in this blog post I wrote: https://t.co/WxQ9pQh2mY
3. Stock options / ESOPs.
The most common form of equity compensation at early-stage startups that are high-growth.
And there are *so* many pitfalls you'll want to be aware of. You need to do your research on this: I can't do justice in a tweet.
https://t.co/cudLn3ngqi
4. RSUs (Restricted Stock Units)
A common form of equity compensation for publicly traded companies and Big Tech. One of the easier types of equity to understand: https://t.co/a5xU1H9IHP
5. Double-trigger RSUs. Typically RSUs for pre-IPO companies. I got these at Uber.
6. ESPP: a (typically) amazing employee perk at publicly traded companies. There's always risk, but this plan can typically offer good upsides.
7. Phantom shares. An interesting setup similar to RSUs... but you don't own stocks. Not frequent, but e.g. Adyen goes with this plan.
A thread.
1. Equity is something Big Tech and high-growth companies award to software engineers at all levels. The more senior you are, the bigger the ratio can be:
2. Vesting, cliffs, refreshers, and sign-on clawbacks.
If you get awarded equity, you'll want to understand vesting and cliffs. A 1-year cliff is pretty common in most places that award equity.
Read more in this blog post I wrote: https://t.co/WxQ9pQh2mY
3. Stock options / ESOPs.
The most common form of equity compensation at early-stage startups that are high-growth.
And there are *so* many pitfalls you'll want to be aware of. You need to do your research on this: I can't do justice in a tweet.
https://t.co/cudLn3ngqi
4. RSUs (Restricted Stock Units)
A common form of equity compensation for publicly traded companies and Big Tech. One of the easier types of equity to understand: https://t.co/a5xU1H9IHP
5. Double-trigger RSUs. Typically RSUs for pre-IPO companies. I got these at Uber.
6. ESPP: a (typically) amazing employee perk at publicly traded companies. There's always risk, but this plan can typically offer good upsides.
7. Phantom shares. An interesting setup similar to RSUs... but you don't own stocks. Not frequent, but e.g. Adyen goes with this plan.
