Why We Invested: Rally Rd
I’m a part owner in a ’69 Boss 302 Mustang and a ’85 Ferrari Testarossa. As a New Yorker, owning a car has always been a low priority for me. However, in the time between my initial investment and now, I have generated returns of 3.25% and 3.03%, versus the 1.84% and 1.49% increase in the S&P over the same time period, respectively.
Collectible cars are a profitable alternative asset class, a space that is significantly heating up. Plus, there’s a real asset to show off. Chris Bruno, Max Niederste-Ostholt, and Rob Petrozzo are building Rally Rd with the mission of increasing access to alternative investments for retail investors.
Historically, alternative investments — defined as non-conventional assets such as private equity, real estate, or real assets — have produced significant returns for those wealthy enough to be able to afford to buy or invest in them. Buying a house or a piece of art, letting it accrue value over the years, and then selling it for multiples on the purchase price has traditionally been a way for some to get returns on alternative investments. Not only have these investors seen strong returns, but alternative asset classes are also considered to be uncorrelated with the traditional stock market, providing differentiated and complementary returns. However, a majority of the population does not have the wealth to invest this way and are therefore left out of some highly profitable markets.
Today, Rally Rd is making alternative investments available to the average retail investor, starting with cars. The company’s platform allows clients to take part in the IPO of a collectible car for as little as $50, appealing to both the car enthusiast as well as the alpha investor. When a new car is announced, Rally Rd provides you with the historical performance of the car, its history and timeline of ownership, visuals, as well as commentary from car enthusiasts and experts such as Jay Leno — think of it like a consumer-friendly S1 filing. In the near future, Rally Rd will go further, adding features like chat to enable investors to their prospective investments, layering on a social dynamic.
At Anthemis, the democratization of assets is a theme we see tremendous opportunity in. Demand on the retail side is on the rise, as evident by the demand in the crypto space and the increased number of real estate funds. The JOBS Act is also a sign that regulators are behind this push, lowering barriers for non-accredited investors.
Today, most of the innovation has been focused on traditional asset classes. While startups in the space have had a significant impact on lowering the financial and education barriers that the average consumer faces when making investment decisions, we see so much opportunity to go beyond stocks and bonds, including into more tangible assets. The real asset space is broad, from collectible trading cards, to real estate, to luxury goods like jewelry. A property you once admired from afar can now make up a fraction of your investment portfolio.
We are excited about Rally Rd’s focus on collectible cars and even more so for the longer term vision of the company. Rally Rd is starting with cars but is poised to expand its offering to various types of collectible assets. There is significant value in assets ranging from cases of wine, to books, to watches, and other collectibles. Though owning such assets outright may be limited to those with higher income, being able to derive value and turn a profit from an investment in them, while also being able to see the physical item that you own, is exciting. It also broadens the prospective market from purely market-focused consumers to include collectors, fans, and aficionados.
We are excited to invest in Chris, Rob, Max and the team at Rally Rd and look forward to supporting them in the years to come!
