Jekyll2026-06-13T10:00:52+00:00https://yieldtalk.com/feed.xmlYieldTalk: Informed Investment CrowdfundingReviews and profiles of 100+ investment crowdfunding websites, including real estate, startups, litigation finance, art, fine wine, collectibles, alternative assets and more.News and Links - 2022-09-172022-09-17T00:00:00+00:002022-09-17T00:00:00+00:00https://yieldtalk.com/weekly-roundup-2022-09-17👋 This week’s newsletter is brought to you by:

Ryse

RYSE is an IoT technology company that creates smart home devices to automate window coverings, leading to improved comfort and energy savings. The company has generated over $5 million in sales, received a CDN$4 million cleantech grant, has been featured in Fox, TechCrunch, and CBS. RYSE is raising up to $25 million, at $1/share via Regulation A+ open to retail and accredited investors. Minimum investment is $1,000. Open to all investors.

Find out more at https://invest.helloryse.com 👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

Personal financial decisions are rarely made independent of the overall life and family context of the person making them (age, savings, income, life stage, health, etc.), and this piece is a useful reminder that what makes great sense for one investor may be totally wrong for someone else, and that it’s important not to judge others’ choices without understanding the full complexity of their situation:

We don’t get to test drive our financial lives in some experiment where we get to perform Monte Carlo simulations thousands of times to figure out the optimal path with the highest probability for success. … Sometimes people make dumb financial decisions on purpose because it makes sense for them even if it doesn’t make sense to you.

Real Estate

In Business Insider, one economist predicts dark days ahead for the housing market (especially the low end) as new home construction slows dramatically with few buyers able to afford new construction:

With fewer people competing for homes, the real estate market is losing steam. In July, nationwide new home sales fell to a six-year low, declining to just 511,000 units. During the month, existing home sales — a measure of sales volume and prices of existing housing inventory — declined for the sixth consecutive month, falling to a two-year low as only 4.81 million units were sold.

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🏘 Inflation Adjusted House Prices Declined in June.

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After climbing at a record clip, the Pace of Rent Increases Continues to Slow:

Rents are still increasing, and we should expect this to continue to spill over into measures of inflation in 2022. The Owners’ Equivalent Rent (OER) was up 5.8% YoY in July, from 5.5% YoY in June - and will likely increase further in the coming months.

Startups/Venture

Retired professor Jeffrey L. Funk makes the case that the last decade worth of startups have been far less productive than prior generations: they are accumulating massive losses while also doing little to commercialize genuinely useful new technologies:

[As] of March 15, 2022, there is not a single new U.S. startup in the top 100 companies for market capitalization, a situation that did not exist in previous decades, when companies such as Microsoft, Qualcomm, Google, and Facebook reached the top 100 within 14 years of their founding. More worrisome, there are only three new startups within the top 300 companies for market capitalization.

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An open secret in the corporate world is that most companies just aren’t very good at true strategy work. Sure they can produce shiny Excel models showing NPV over the next 5 years, but the reassuring precision of a spreadsheet masks the inherent uncertainty of the future. I appreciated the point Roger Martin makes in this (excellent) piece on the dominance of technocratic planning over strategy that entrepreneurs are some of the best practitioners of true Strategy out there, and more access to the capital is a Very Good Thing:

To me, entrepreneurship offers the best prospect for a rebirth of strategy. It is a great new age of entrepreneurship, with more funding for new ventures than ever before. And funders are focused on outputs, not inputs. They care about choices that generate huge growth and that shape and invent the future. However, in the world of entrepreneurs and venture funders, strategy is not a beloved concept because it is often considered to be a technocratic exercise — no surprise because it usually is. In fact, entrepreneurs will often claim that they don’t have a strategy or do strategy. But as I argue, strategy is what you do, not what you say, so everyone has a strategy.

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The acquisition of UK crowdfunding platform Seedrs by Republic –first announced last November – is now finalized following sign-off from Her Majesty’s High Court of Justice in England 👑.

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Real estate investment platform Groundfloor (read our review here) is raising another financing round on investment crowdfunding platform Wefunder (read our review here), at a pre-money valuation of $234M.

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10 years since passage of the 2012 JOBS Act, a column in American Banker calls on the SEC to do more to support the flow of capital to small businesses and entrepreneurs:

In 2012 Congress passed the Jumpstart Our Business Startups Act Act to facilitate growth in the private sector. As the JOBS Act celebrates its 10th anniversary, some on Capitol Hill are advocating for additional iterations of the bill that would expand its scope. While these are worthwhile and valuable efforts, the Securities and Exchange Commission should first ensure that the original law is implemented in accordance with congressional intent and in a manner that more appropriately balances retail investor access and protection.

Crypto/web3

Analysts say Bitcoin May Have Hit a Floor After Powell’s Speech. The largest cryptocurrency is down about 6% since Powell’s hawkish Aug. 26 Jackson Hole speech.

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SEC Homes in on Small Cryptos to Bolster Oversight Case. The Securities and Exchange Commission appears to be targeting a trio of smaller, privacy-focused cryptocurrencies, including Stellar’s lumen token, the world’s largest digital asset manager revealed in filings recently.

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Ethereum ‘Merge’ May Present New Opportunities For Investors. Investors will join the developers and crypto enthusiasts who will be closely watching the fallout from Ethereum’s “Merge” over the next couple of weeks, looking for signs of what it means for the long-term value of the Ethereum as an asset and a platform:

The change is significant as proof-of-work consensus involves people solving complex equations in order to validate a transaction—also called mining. The method—which is also used by Bitcoin—is extremely energy-intensive and therefore considered by many to be environmentally unfriendly.

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Famed VC Fred Wilson offers his take on the Ethereum Merge:

The Merge is probably the most important change that a large scaled blockchain has ever undergone. It is not without risk and there is a chance that things will not go smoothly. The Ethereum core developers have been working on this effort for many years and have deployed many testnets and they are confident they can pull this off next month. The crypto/web3 world will be watching closely and I am rooting for them. I think this is a very important moment for the sector and that it will be very positive if things work as planned.

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - 2022-08-232022-08-23T00:00:00+00:002022-08-23T00:00:00+00:00https://yieldtalk.com/weekly-roundup-2022-08-23Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

The data presented in this breakdown of where the wealthiest Americans made their fortune is certainly interesting, though I’d prefer if they made a distinction between “private investments” that are actually company founders and those done by non-founders. That quibble aside, it’s a nice reminder of the asymmetric upside potential in early-stage investing:

For starters, the barrier to entry for private investments can be higher than for stocks and bonds. But for professionals whose clients have the necessary assets, private investments such as real estate, hedge funds, private equity and venture capital are more than worth it. Because, as our Fortune 400 folks have demonstrated, the best opportunities to build wealth are in real estate and private investments.

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I like to periodically include stories about investment fraud and scams as a reminder that while most companies operating in the alternative investment ecosystem are on the up-and-up, there are bad actors out there, and the old adage about not putting all your eggs in one basket is as true as ever:

A Pennsylvania-based investment advisor was sentenced to five years in prison after pleading guilty for a Ponzi-like scheme defrauding investors of more than $7 million, according to the Department of Justice. One official said the accused advisor used the funds for “everything from car payments, to country club fees, to payouts to previous investors.”

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This post from the folks at MicroVentures is a concise summary of the common cognitive biases we all face when making investment decisions. It’s hard to avoid their influence altogether, but knowledge is power when it comes to understanding your own psychology and limiting their impact.

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The U.S. Federal Reserve recently issued additional guidance for banks considering activities involving cryptocurrencies, emphasizing that firms must notify the Fed beforehand and make sure whatever they do is legally permitted:

The Fed said in a statement that while cryptocurrencies could present “potential opportunities” to banks, firms needed to make sure they had systems in place beforehand to ensure the volatile assets did not threaten safety and soundness or consumer protections.

Real Estate

A pandemic-fueled binge on industrial real estate projects may be coming to an end as large institutional investors (including sovereign wealth funds) shift capital en masse into Treasuries:

In the second quarter of 2022, industrial investment sales volume totaled $35.4 billion, an 8 percent increase over the same period in 2021, according to real estate data firm MSCI Real Assets. While positive, that growth was far behind the 40-plus percent increases in multifamily and retail sectors. In addition, the number of industrial properties trading hands declined by 24 percent year-over-year, to 1,939.

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Is Housing a Bubble Waiting to Pop? The difference between a healthy correction and a bubble waiting to be popped in the housing market.

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Research from WMRE shows how rising interest rates and macroeconomic concerns are affecting multifamily investors’ ability access to capital:

Although 41 percent see no change in the availability of equity compared to 12 months ago, 37 percent think it is less available and 16 percent said it is more available. On the debt side, 38 percent said there was no change in availability compared to 42 percent who consider it to be less available and 15 percent who believe it is more available than 12 months ago. With the exception of 2020, respondents have the most negative view on the availability of capital in the history of the survey.

Startups/Venture

A disappointing analysis from Crowdfund Capital Advisors reveals that the majority of Reg CF investment crowdfunding offering issuers are behind in their annual reporting requirement:

[T]here have been 2,232 issuer that have raised up to $5 million under Reg CF as of December 31, 2021; 54% have NOT filed at least one annual report (FORM C-AR) nor a notice to terminate reporting. So effectively, these companies are out of compliance with the federal rules.

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As another sign of investor caution amid economic headwinds, profitability has displaced growth as the major driver behind valuations among public software companies. Growth, growth, growth has been the rallying cry among startups for some time now, and a shift in focus toward profitability isn’t a bad thing:

Net income has surged to the highest correlate of a public software company’s multiple surpassing revenue growth. Narratives published in newspapers trumpeting the importance of profitability correctly assess investor sentiment on stock exchanges.

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Venture capital investment in the youth wellness and mental health space spiked by 1,376 percent in just four years, ballooning to $871 million in 2021, up from $59 million in 2018.

Crypto/web3

Via the Crowdfunding Professional’s Association, this post dives into how many crypto offerings are simply end runs around SEC regulation, with predictable consequences for many investors:

What’s happening with crypto assets is that companies that usually issue shares in early ventures have taken to giving crypto tokens as a proxy for equity (called shadow equity) in companies. This lets them raise capital from investors without safeguards or regulations around securities issuance. And to add insult to injury, these unregistered crypto securities are immediately liquid with no lock-up period before they can be sold, and they can be sold directly to the public before the company achieves any measure of traction or success.

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Where Is The Crypto Market Heading? The recent crypto market plunge and the subsequent bear market have made many investors very skeptical of its long-term outlook and growth opportunities.

Litigation Finance

The folks at LexShares have published their latest quarterly outlook on the litigation finance industry, which includes insight into the growing number of secondary market transactions:

We believe there are a myriad of deals ripe for secondary transactions and continue to be an active participant in the secondaries market. Secondary funds are commonplace in maturing asset classes such venture capital, private equity, and real estate.

Odds and Ends

Notable Offerings

Selected investment offerings from around the investment crowdfunding ecosystem.

  • Tower Place Apartments. EquityMultiple is pleased to offer an $8.9M common equity investment (the “Investment”) in the acquisition and repositioning of Tower Place Apartments, an existing 204-unit institutional quality multifamily property in the Center City neighborhood of Philadelphia, Pennsylvania (the “Property” or “Tower Place”). The Property was originally built in 1959 as an office building and was redeveloped into a luxury apartment building in 2012 consisting of 204 one and two-bedroom units. Minimum investment is $10,000. Open only to accredited investors. Find out more at EquityMultiple  👈
  • Optimist Park Multifamily Development. Cadre is partnering with Jefferson Apartment Group (“Sponsor”) to develop Optimist Park Multifamily Development, a Class A multifamily asset located in NoDa (short for North Davidson) - Charlotte’s arts and entertainment district. We were attracted by the potential to execute on a shovel-ready development alongside a best-in-class sponsor in a burgeoning location within one of the fastest growing markets in the country. Minimum investment is $25,000. Open only to accredited investors. Find out more at Cadre  👈
  • Flint Creek and Rosemount Campgrounds. Invest in a first mortgage loan position that will facilitate the acquisition and repositioning of two campground resorts located in Middlesex, NY and Tamaqua, PA. The Properties benefit from strategic positioning as they are located under a three-hour drive from New York, Pennsylvania and D.C, representing over 40M in population concentration. Proceeds from the Investment would fund an interest reserve for the first mortgage loan and a light value-add business plan associated with the redevelopment of the two campgrounds to ultimately optimize the property for its highest and best use. Minimum investment is $10,000. Open only to accredited investors. Find out more at EquityMultiple  👈
  • Maybe. Maybe is modern financial planning, investment management and retirement planning. Minimum investment is $100. Open to all investors. Find out more at Republic  👈
  • Aquipor. AquiPor is planning to advance a new permeable concrete technology disrupting two significant markets - stormwater infrastructure and concrete production. These two pillars of AquiPor could create a green solution to stormwater pollution and flooding in our cities, provided in a low carbon process that creates concrete from reclaimed materials. This innovation has been thoughtfully designed to hopefully meet the needs of a changing climate. Minimum investment is $250. Open to all investors. Find out more at StartEngine  👈

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - 2022-07-302022-07-30T00:00:00+00:002022-07-30T00:00:00+00:00https://yieldtalk.com/weekly-roundup-2022-07-30Notable Offerings

Selected investment offerings from around the investment crowdfunding ecosystem.

  • 93 Bennington Street (Sora Revere). Shovel-ready and 100% market rate, 114-unit transit-oriented apartment development only 15 minutes from Downtown Boston and a 10-minute walk to Revere Beach. Minimum investment is $50,000. Open only to accredited investors. Find out more at RealCrowd  👈
  • Domaine de la RomanĂŠe-Conti Horizontal Collection. The name Domaine de la Romanée-Conti may be the most well-known in the world. Known by most simply as “DRC” and those in Burgundy as “The Domaine,” the wines produced under the DRC label are some of the most in-demand and expensive wines on the planet. Only working with fruit from Grand Cru vineyards, the caliber of wine is nearly unmatched in the world of wine. Minimum investment is $100. Open to all investors. Find out more at Vint  👈
  • Penfolds Grange Vertical Collection. “Australia’s most famous fine wine” is how Jancis Robinson describes Penfolds Grange in her world-renowned wine resource, The Oxford Companion to Wine. First produced in secrecy in a shed in the Barossa Valley, Grange has become a global icon, and the benchmark for the quality Australian winemaking can achieve. Celebrating the 70th anniversary of the first release of this legendary wine in 1952, we are thrilled to offer a thirteen vintage vertical of the most important contemporary releases* of Penfolds Grange. Minimum investment is $50. Open to all investors. Find out more at Vint  👈
  • Creative Homies. A Black-owned creative hub built for BIPOC creatives, in downtown Portland. Cyrus Coleman and Adewale Agboola (pronounced “WAH-Lay”) have purchased the historic Enterprise Building originally constructed in 1905. The 20,000 square foot building is three floors with a full basement and is located at 433 NW 4th Avenue, Portland, Oregon. Cyrus and Adewale plan to repurpose it as a creative hub dedicated to the BIPOC (Black and Indigenous People Of Color) community in Portland and are calling it the Creative Homies Enterprise Building (the “Building”). Minimum investment is $500. Open to all investors. Find out more at Small Change  👈
  • Tribevest. Tribevest is a collaborative, group investing platform that enables friends and family to organize as an investor group, pool money, and manage joint investments. Prior to Tribevest, group investing was difficult with a variety of tools, time and research to get started. Minimum investment is $100. Open to all investors. Find out more at Wefunder  👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

The data is from Europe, but this recent survey on attitudes about alternative investments suggests demand will continue growing despite (or arguably because of) current economic headwinds and inflationary pressure:

The results of this survey showed a positive outlook for Alternative assets over the next 12 months with 53% stating that their appetite for alternative assets will increase over the next 12 months whilst only 6.4% said they would decrease (46% net growth). The research went on to identify three key reasons for this growth; firstly, due to the current rate of inflation (62%, secondly due to an increasing need to diversify existing portfolios (62%) and finally because of the attractive higher potential returns (53%).

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Perhaps the writer who lost $135K in various crypto schemes (see the Crypto section below) could have saved some pain if they’d read this (excellent) primer on spotting bullshit in investment offerings:

Bad actors’ tactics are sophisticated and rooted in psychology. They dangle the prospect of wealth and riches (“phantom fixation”). They launder credibility: legitimization via the backing of authoritative figures. They use social consensus and group psychology to normalize ideas and narratives and pressure people to stop asking questions. They use scarcity or immediacy as a pressure tool (you’re about to miss the big returns; the fund is about to close; ngmi). These are just a few of the techniques uncovered by the Consumer Fraud Research Group undercover investigation of sales transcripts.[1] The FINRA Investor Education Foundation promotes basic diligence hygiene: learn to recognize red flags, know which questions to ask, and independently verify answers.

Real Estate

I love it when writers go beyond knee-jerk reactions to headlines and take the time to put current events in the context of history, especially when it comes to major shifts in technology or finance. Ben Carlson looks at the recent remote-work-driven housing market changes in the context of prior “mass migration” events (did you know that about 100 years ago more 5% of the entire US population up and moved to Florida in the span of less than 3 years?!):

“We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period. This cross-sectional estimate combined with the aggregate shift to remote work implies that remote work raised aggregate U.S. house prices by 15.1 percent.”

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The standard “real estate cycle” is understood in four distinct (and sequential) phases: expansion, hyper-supply, recession, and finally recovery. What we’re experiencing right now doesn’t quite fit that pattern because despite signals a recession is coming, there’s been no sign of hyper-supply (quite the opposite), with no clear answer as to what’s next:

“In the typical narrative the “hyper supply” is because construction companies over-build, and there becomes a glut of housing units,” [economist Todd] Metcalf said. “This occurred during the housing bubble preceding the Great Recession. However, at the national level we still see a severe housing shortage.”

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That dearth of supply in the housing market means it’s been a good time to be a house flipper, with research from property data firm Attom showing 1 in 10 homes sold in the past 12 months were fix-and-flips, the highest proportion since at least 2000:

The median price for pre-flip homes reached an all-time high of $327,000, up more than 30% from the same period the year before. Post-flip home prices aren’t increasing as quickly, causing gross profits (the difference in before and after sale prices) to shrink from $70,000 in 2021 to $67,000 in 2022.

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EquityMultiple has published a handy infographic summarizing the characteristics and return rates of various alternative investments. It’s not particularly comprehensive (and is understandably focused on real estate related investments) but interesting nonetheless.

EquityMultiple’s Guide to Alternative Investments is organized across a volatility spectrum, with less volatile investments at the top, and more volatile investments at the bottom. Among other considerations, we’ve also included the level of liquidity, and whether we think the investment serves as an inflation hedge and/or portfolio diversifier.

Startups/Venture

SaaS has become the dominant business model in enterprise software, and is far more prominent than it was during the last two recessions. SaaStr’s Jason Lemkin argues that despite some turbulence (especially in the SMB market), history suggests most SaaS companies will be able to weather current economic headwinds:

The amount of folks buying SaaS software is a force like we’ve never seen before, and even with some stock market drama, many top SaaS companies still trade at $4B, $10B, $20B or more just a decade after being founded.

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This interview with CrowdCheck’s Sara Hanks (one of the most experienced attorneys working on Reg A+ filings) covers a lot of territory, including the two biggest problems with early issuers and how despite improvements in the quality and quantity of companies using Reg A+, she still sees worrisome potential for fraud and scams in some corners of the market:

There are bad actors out there using Reg A for various scams and schemes. I’ve blogged about a couple of the patterns I’ve seen and it’s still happening. I’d suggest that investors be very careful about Tier 1 offerings made by companies whose shares are already traded on OTC Markets. At some point, one of these scams is going to end up tainting the entire market.

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Crunchbase reports that it’s two steps forward, one step back for black founders amid the current cooling in venture funding after five quarters of historic levels (albeit on a tiny base to start from):

Although funding to Black startup founders in the U.S. has always been disproportionately tiny—at single-digit percentages—last year set a record in terms of dollars invested in those companies, Crunchbase data shows. Quarterly funding in the five quarters before this was much higher, ranging between $850 million and $1.2 billion, according to Crunchbase’s Diversity Spotlight data.

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In a column on TechCrunch, VC Marc SchrĂśder makes the case that the current pullback in venture funding will present very attractive opportunities for investors willing to move ahead:

There are many very high-quality teams out there with strong balance sheets and plenty of runway building potentially world-changing products. If this downturn remains protracted for years, these companies have enough cash on hand to survive, as well as products they will be able to sell to large enterprises, even through recession-like scenarios. As investors pull back from the market, these companies will suffer valuation declines and present once-in-a-lifetime buying opportunities for venture capitalists with the resolve to invest in them.

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We’ve talked here before about the important distinction between investment platforms that take a curatorial approach to selecting which offerings to present to investors and those that adopt more of a marketplace approach of “letting the crowd decide”. The latter approach means more volume (and therefore wider selection for investors), but it predictably means looser standards when it comes to issuer quality, as demonstrated by FINRA’s recent fines issued to both Wefunder and StartEngine:

For example, one issuer, whose product was a home robot, exaggerated the robot’s level of functionality in a demonstration video posted on the StartEngine website. The video depicted the robot independently performing tasks such as waking sleeping family members, teaching a child piano and art, projecting a recipe onto a cutting board, patrolling a home for intruders, adjusting a thermostat and playing peek-a-boo with a child. During the offering, StartEngine received information that caused it to know or had reason to know that these claims were exaggerated and misleading, but it failed to correct them. Although a disclaimer on the offering page noted that the robot was a work-in-progress, it was insufficient to remediate the misleading content.

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We’ve seen startup-focused platforms like Republic branch out into offering real estate, and now real estate investment platform Fundrise is launching what they’re calling the “Fundrise Innovation Fund” to invest in startups:

The Fund intends to invest in a diversified portfolio of private high-growth technology companies, with an initial focus on several sectors that we believe have exceptional macro tailwinds.

Crypto/web3

Crypto’s crash is causing collateral damage in some interesting places, like this tenant who lost half of their security deposit:

A Reddit poster asking for legal advice reported that when they moved out of their apartment, they received only $1600 of the $3000 they provided to their landlord as an initial security deposit. When they asked what happened to the rest of the money, the landlord explained that they had put the money into a “money market account” that had lost value, then admitted they’d invested it into Bitcoin.

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Even if you have never (and never intend to) put any money into a cryptocurrency, you should read this reasoned reflection from someone who did – and lost all $135K of it – for its lessons on risk and research:

I used to think gambling meant hitting the slots in Vegas. I spent nearly a year in Vegas on a consulting project and never gambled once. But as it turns out, I am a gambler because gambling is putting money into anything without DYOR (doing your own research).

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Noted VC Albert Wegner (of Union Square Ventures) makes the case that web3’s “permissionless data” model is an innovation on par with the “permissionless publishing” Web 1.0 brought us (and that just as with the wider web, there are real downsides despite the positives):

It is difficult to overstate how big an innovation this is. We went from not being able to do something at all to having a first working version. Again to be clear, I am not saying this will solve all problems. Of course it won’t. And it will even create new problems of its own. Still, permissionless data was a crucial missing piece – its absence resulted in a vast power concentration. As such Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities.

]]>Andrew Savikashttp://andrewsavikas.comRevisiting my Hedonova Review2022-06-11T00:00:00+00:002022-06-11T00:00:00+00:00https://yieldtalk.com/revisiting-hedonovaIn October 2021, I published a review of Hedonova, a hedge fund offering investors exposure to a range of alternative assets. When writing reviews for YieldTalk, I rely heavily on information published on a platform’s website, information received by email or phone from company representatives, and where possible relevant SEC and other regulatory findings.

Based on my initial research and phone conversations with a Hedonova representative, I was comfortable enough with Hedonova to make a small personal investment ($1,000). Hedonova also became a referral partner with YieldTalk, paying a commission for investor referrals (affiliate revenue is one of the main ways I fund YieldTalk), and they also paid a fee to be listed as a “Featured Review” on the YieldTalk website.

Recently I’ve learned some new information that leaves me with significant concerns about Hedonova, to the point that I would no longer choose to make an investment myself (and in fact have requested a withdrawal [ Update. I have received my full withdrawal.]).

On the surface, Hedonova presents as a legitimate (if quite young) hedge fund, but if you dig a bit deeper, some red flags emerge. For example, several of the pictures used for key executives (both on social media and on the Hedonova website) are either stock photos or have been plagiarized from other websites:

The issue goes beyond just questionable photo choices. Key Hedonova team members are supposedly affiliated with well-known firms (like UBS and Morgan Stanley) and universities (like Zurich’s ETH), yet it’s nearly impossible to find any public information to validate those pedigrees, which is quite unusual for a tech-savvy and global team.

While searching Google for more information about Hedonova’s team, I also came across several answers on Quora from Hedonova’s CEO, Alexander Cavendish. At least two of the answers are clearly plagiarized from other publications:

Along similar lines, a YieldTalk reader helpfully pointed me to this twitter thread detailing someone else’s concerns about Hedonova.

And this Hedonova review from Alts further illustrates the points above.

In my conversations (mostly via email) with Hedonova, they claim to have explanations for all of these issues, but at this point there are just too many red flags to credibly be explained away. I have refunded the outstanding advertising fees paid by Hedonova, and removed the affiliate link from the review, as well as reduced the rating.

Although the reviews on YieldTalk are not intended to be investment advice, because Hedonova was featured quite prominently on the YieldTalk website and in our email newsletter, I felt obligated to share more context about the change in rating. As a reminder, you should always do your own research before making any investment decision, and please don’t invest more than you can afford to lose in any particular investment.

To be clear, I could absolutely be wrong about Hedonova! Content on this website is just personal opinion, and presented for entertainment and informational purposes. I will gladly revisit the Hedonova review again if additional relevant information surfaces.

If you have also made an investment with Hedonova, I encourage you to do your own research to determine whether to keep your investment in place. I am not an investment advisor, and cannot provide personal guidance on anyone’s specific financial situation.

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - 2022-06-072022-06-07T00:00:00+00:002022-06-07T00:00:00+00:00https://yieldtalk.com/weekly-roundup-06-06-2022✨ New Review: Percent – Invest in Private Credit

Percent is an online alternative investment platform offering investors the opportunity to invest in a range of “private credit” investments from more than 25 different originators.

The investments available on Percent are primarily short-term private debt offerings across a range of sectors and debt types, including receivables financing, consumer loans, venture loans, and litigation finance.

Notably, offerings on Percent often include exposure to international private debt investments (such as small business loans in Latin America).

Details and returns vary by offering, but target returns are typically 10-15% annualized, with an overall weighted average of 14.43% as of this writing (May 2022). Percent helpfully reports the weighted average APY for each of the originators they work with.

Most investments are short-term (usually around 9 months, but in some cases as short as 1 month or as long as several years), with monthly payments providing ongoing cash flow.

Percent has funded nearly 300 offerings to date, raising $559M in financing with 274 repaid and 6 defaults (representing a 1.82% default rate). At the time of this writing there is one open investment opportunities, but there are usually several offerings open at any given time (prospective investors should note the deals usually fill up quickly). To help investors avoid missing out, Percent recently announced changes to their investment process.

Investments on Percent are open to accredited investors. Our rating: Excellent. You can sign up for a free account at Percent here. 👈

Notable Offerings

Selected investment offerings from around the investment crowdfunding ecosystem.

  • White Burgundy Collection. Burgundy Shines, White Wines Gaining Momentum: In 2021 the Liv-Ex Burgundy 150 Index was up 31% and saw white Burgundy continue to garner intense market interest with the total value of wines traded in 2021 up 2000% since 2010. Minimum investment is $30. Open to all investors. Find out more at Vint  👈
  • Vennly. End-to-end platform for enterprises to create and share secure audio both internally and externally  Minimum investment is $998. Open to all investors. Find out more at SeedInvest  👈
  • VinWizard. Invest in a proven leader in winery automation, monitoring, and control. For over 20 years the VinWizard team has worked with winemakers around the world to make premium wine more efficiently. Minimum investment is $15,000. Open to all investors. Find out more at Harvest Returns  👈
  • Catalyst Real Estate Fund II. The Catalyst Fund II, operated by Colony Hills Capital, is projected to acquire 9 to 15 properties. The Fund will seek Class A- and B value-add properties in the incredible Southeast and Texas markets. Since the Fund’s inception, four properties have been identified for purchase. Minimum investment is $20,000. Open only to accredited investors. Find out more at Holdfolio  👈
  • Investments in ‘67 ANDY WARHOL MARILYN MONROE PRINT (SIGNED). Just days after the death of Marilyn Monroe, Andy Warhol produced the first of his Marilyn silkscreen portraits. Solidifying Warhol as master of pop art, his Marilyn portraits have continued to appreciate. In May 2022, Warhol’s “Shot Sage Blue Marilyn” will be auctioned with an estimate of $200M — the most expensive pre-auction estimate for any publicly sold piece of art. It isn’t only Warhol’s early portraits that command significant premiums. Minimum investment is $10. Open to all investors. Find out more at Rally  👈
  • Champion Lender. Champion Lender – Removing barriers to home ownership for minority communities – is now accepting investments on Republic. Minimum investment is $100. Open to all investors. Find out more at Republic  👈
  • Kornr Store. Many Detroit neighborhoods lack life essentials that we take for granted on a daily basis – access to healthy food and drink options, personal and home goods, and the Internet. The Kornr Store aims to provide a model to change that. Minimum investment is $500. Open to all investors. Find out more at Small Change  👈
  • Grand Reserve Apartments. Grand Reserve Apartments is a 263-unit apartment community located in Ocala, Florida. The property was built in 2003 and is one of the most unique multifamily assets in the Ocala MSA. The property offers a highly differentiated “Big House” design with large floorplans and a superior layout. Grand Reserve is currently 96% occupied and is positioned to continue to benefit from the trend of out-of-state migrants flocking to Florida in search of more space at a discount to rents in the Northeast and Pacific Northwest. Minimum investment is $20,000. Open to all investors. Find out more at Holdfolio  👈
  • CHY Installment Lending Jr. 2022-1. Subordinated deferrable (PIKable) exposure to consumer installment loans originated by Cherry. Minimum investment is $35,000. Open only to accredited investors. Find out more at Percent  👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

For the first time in quite a while, used-car prices are declining (if slightly), just as sales of new homes dip and multiple large employers (including the nation’s two largest private employers, Walmart and Amazon) are reporting they’re over staffed, suggesting the labor market is cooling as well. Taken together these indicators imply inflation may be finally peaking:

These are encouraging signs that inflation has likely peaked, but falling prices are not occurring across every sector. Most notably, we see Energy and Food remain elevated. Some of that is a function of the Russian invasion of Ukraine, but that’s not the only driver of price in these areas.

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The CEO of deVere Group (a large financial advisory and asset management firm) issued a reminder to investors rattled by turbulence in the stock market that diversifying into alternative asset classes (like the ones we cover here at YieldTalk) is an important tool for those seeking capital preservation and capital appreciation:

Such investments could also be useful tools to improve the risk-return characteristics of your investment portfolio. This is because they increase diversification and reduce volatility, due to their low correlations to more traditional investments such as stocks and bonds; and they can hedge some portfolio exposures.

Real Estate

🏘 Even as home sales cool in many countries where prospective buyers now face higher interest rates as well as dizzying prices, institutional investors continue plowing capital into the Single Family Rental (SFR) market:

One reason is that demand for rental homes will jump as home ownership gets costlier. American savers need on average $15,000 more than they did before the pandemic to afford a 10% downpayment. Higher borrowing costs are forcing millennials nearing their peak buying years into longer leases. This coincides with a larger trend fuelled by covid-19: a shift from flats towards suburban homes with gardens and office space—which many households cannot afford and must therefore rent.

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📑An interesting analysis of some new research papers (and Census data) suggests that two of the main drivers of housing price increases over the past two years are migration driven by more flexible WFH options for workers and major growth in household formation:

Putting these two papers together - it is very possible that work-from-home drove some of the likely sources of household formation over the last 18 months. For example, young adults working from home might have been more motivated to move out of their parent’s homes. Or roommates working from home might have decided to split up instead of sharing the same space all day.

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Although “iBuyers” (firms prepared to make cash offers on homes based on algorithmic valuations) have struggled of late (with Zillow exiting the business entirely after suffering heavy losses), that doesn’t mean the end of data-driven models to surface attractive deals. For example, it turns out the broker who sold the most homes in Atlanta last year is a 36-year-old former chess prodigy with a proprietary system built to find undervalued homes on behalf of investors:

Last year, Steigman sold 300 properties in Atlanta for a total of $86 million, according to the Atlanta Realtors Association. He said this is just a “fraction” of his total closings (including Florida sales), which he estimates to be around $130 million.

Startups/Venture

Noted venture capitalist Fred Wilson says the early 80s offer a useful mental model for understanding where things are likely headed over the next 18-ish months:

So I suspect we are either in a recession right now or headed to one, brought on by tightening money supply/higher rates that are being used to control inflation. That recession could easily last until the end of 2023. But we don’t really know how long it will take for this cycle to play out.

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A common misconception is that great startups emerge from “eureka!” moments of inspiration and serendipity, with founders inspired when they discover an unsolved problem. Amy Hoy offers a deliciously entertaining take on why that’s a myth, and why it’s so important for startups to start with people, not with problems. The audience is founders, but it’s great insight for investors too in evaluating startups:

Secondly, I (the putative customer) feel like I’m being swarmed by a flock of demented seagulls. Your goal as a founder should be to make your customers feel understood, supported, and respected. Not pecked to death like a discarded pizza crust.

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Business Insider published excerpts from an email sent to founders by YCombinator (the vaunted incubator that helped bring Dropbox and AirBnB to life) with advice on what the current economic headwinds mean for startups, including the likely impact on fundraising and valuations (tl;dr: “stay alive”):

Remember, that many of your competitors will not plan well, maintain high burn, and only figure out they are screwed when they try to raise their next round. You can often pick up significant market share in an economic downturn by just staying alive.”

Odds and Ends

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - May 24, 20222022-05-24T00:00:00+00:002022-05-24T00:00:00+00:00https://yieldtalk.com/weekly-roundup-05-24-2022✨ New Review: Mortar Group – Invest in niche NYC neighborhoods

Mortar Group is a vertically integrated real estate firm offering investments in multi-family commercial real estate projects in New York City, with a focus on niche neighborhoods like Williamsburg, Prospect Heights, and Greenpoint.

The projected return varies based on the specific offering, but Mortar Group says that they have earned an overall average 18% annual return since 2004, with returns of 16-21% across their offerings.

The average hold time for real estate investments with Mortar Group is 3-5 years, and investors receive regular cashflow from rental income (net of fees, and distributed quarterly), and then a pro-rata share of the profits when a property is sold.

According to the Mortar Group website, they have closed 23 projects, representing $239M in gross sales. As of this writing, there are six active offerings available for investment.

Mortar Group’s in-house development team reviews and underwrites all of their investments. Their long track record and narrow focus on niche NYC neighborhoods implies a strong competence in property selection.

Investments with Mortar Group are open to accredited investors. Our rating: Excellent. You can sign up for a free account at Mortar Group here. 👈

Notable Offerings

  • Bitcoin Discovery Fund. As an investor in the Bitcoin Discovery Fund, you’ll become a fractional owner of bitcoin mines. As these bitcoin mines regularly discover new bitcoin, the bitcoin are then distributed periodically to all investors in the Bitcoin Discovery Fund. The bitcoin mines are powered by off-grid natural gas, which is converted into electricity for powering the mines, offering a cost advantage over on-grid mining. Investors accumulate Bitcoin at below-market rates over the life of the Bitcoin Discovery Fund. 50% off origination fees on investments made before July 1. Minimum investment is $5,000. Open only to accredited investors. Find out more at EnergyFunders  👈
  • IDF Consumer Loans Sr. 2022-3. Percent is offering exposure to a portfolio of consumer loans in Mexico denominated in Mexican pesos. These assets have been originated by ID Finance, a growing tech-enabled origination partner headquartered in Barcelona, Spain with local operations in Mexico. The investment offered is a short-duration fixed income security, supported by the cash flows generated from ID Finance’s loan portfolio. Minimum investment is $500. Open only to accredited investors. Find out more at Percent  👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

Choosing investments is challenging, especially with so many interesting opportunities out there ( and more coming out all the time). My wife spotted this article on the math behind making important decisions while avoiding committing before you really know what you want, while also not wasting time endlessly exploring options. It’s a neat model, with applications well beyond investing:

The basic idea is that, if you need to make a decision from 100 different options, you should sample and discard (or hold off on) the first 37. The 37% rule is not some mindless, automatic thing. It’s a calibration period during which you identify what works and what does not. From the rejected 37%, we choose the best and keep that information in our heads moving forward. If any subsequent options beat that benchmark standard, then you should stick with that option to get the best ultimate outcome.

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Residential housing is such a massive part of our economy that it’s a logical place to look when assessing if and when we’re headed toward a recession. Calculated Risk does a nice job of summarizing both common reasons for recessions as well as the specific housing numbers to watch when looking out for the next one:

One of my favorite models for business cycle forecasting uses new home sales (also housing starts and residential investment). I also look at the yield curve, but I’ve found new home sales is generally more useful … For the economy, what I focus on is single family starts and new home sales.

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One of the reasons to diversify some of your portfolio into alternative assets like startups, real estate, litigation finance, or art & fine wine is that those asset classes aren’t particularly correlated to the stock market. That said, a bear market like the one we seem to be entering still stings, and Ben Carlson has some helpful advice about surviving bear markets, and a lot of it applies just as well to managing your psychology through any adverse investment outcome:

Jason Zweig taught me in Your Money & Your Brain that losses and gains can have profound physical effects on both the body and the brain. Financial losses are processed in the same area of the brain that responds to mortal danger.

Real Estate

Last week we highlighted a fascinating analysis out of Florida Atlantic University comparing the current overheating in the housing market to what happened in 2007. Adding more context, this piece from Fortune references that same study but also layers in more data from Moody’s, Zillow, CoreLogic and more to paint a more nuanced picture:

An analysis provided by Moody’s Analytics to Fortune finds 96% of regional housing markets are overvalued, and 27% of markets are overvalued by more than 30%. Meanwhile, a separate analysis by the Real Estate Initiative at Florida Atlantic University finds every single one of America’s 100 largest housing markets are overvalued, including 44% of markets that are overvalued by more than 30%.

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But despite seeing a record amount of housing under construction, it may still not be enough to make up for years of under-building, especially for first-time home buyers, which presents an opportunity for builders or investors who can provide attractive, affordable housing for first-time buyers (assuming they can actually get the projects done…):

The build cycle time for a home—the time it takes to build it from start to finish—is roughly 50% longer than it was prior to the pandemic, said Eric Finnigan, director of building products at John Burns Real Estate Consulting, a research firm.

Startups/Venture

I include a lot of content in this newsletter that’s ostensibly aimed at startup founders, but that’s because a lot of it is just as useful for startup investors who also care about things like valuations and burn rates:

A helpful exercise is to figure out what ARR you need to reach to get back to your last round’s valuation and plan accordingly. To do this, use the estimated change in valuation multiples from leading public companies in your space and add a growth- and efficiency-adjusted premium for your faster growth. Then use this number to calculate the ARR you need to get to. Your goal should be to hit this revenue target with at least 12 months of runway. If you can do this, you’ll be in a strong position to raise your next round of funding. Raising capital with less than 12 months of runway sends a negative signal to the market and makes it harder to have a good fundraise.

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Tom Tunguz offers a timely tour through 3 eras of startup valuation between the DotCom era and today (when he argues we’re actually about to enter a 4th era amid plummeting public-market comps):

With $200-300b invested in venture capital this year, the dominant pricing force remains abundant capital supply seeking limited investment opportunities. Since only one VC establishes the market-clearing price, valuations can remain elevated, a phenomenon extant in the early stage market..

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Dave Kellogg is one of the smartest (and most entertaining) folks out there writing about B2B SaaS sales and marketing (he’s also just an all-around nice guy), and he recently made an appearance on an investing podcast talking about understanding SaaS marketing as an investor. After you listen to the podcast, be sure to check out the rest of Dave’s blog, there’s some fantastic stuff there:

Common problems in the pipeline [include] air, rolling hairballs, sudden changes / gaming, squatting, tantalizing pipeline, and excess coverage.

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When looking at potential startup investments, you’re bound to encounter references to the acronyms TAM and SAM (short for “total addressable market” and “serviceable available market” respectively), and this piece offers insight into just how companies come up with those numbers (and some perspective on how to assess whether you actually believe them!): [Paywall possible]

When you present your market size data to investors, they’ll look for TAM, SAM and SOM information. These data points pack a mystique about numbers that can appear colossal and out of reach, but if you approach market sizing methodically, you’ll realize it’s really not that complicated.

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If you’ve reviewed more than a few startup pitch decks, you’ve no doubt encountered financial projections that are, to put it charitably, “optimistic”. Jason Lemkin from SaaStr advocates that founders lean more heavily on recent history when making projections. Something to think about the next time you’re looking at a startup pitch:

The #1 thing I see with financial projections is they just don’t speak with data. Instead, they speak with dreams.

Odds and Ends

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - May 15, 20222022-05-15T00:00:00+00:002022-05-15T00:00:00+00:00https://yieldtalk.com/weekly-roundup-05-15-2022✨ New Review: Percent – Invest in Private Credit

Notably, offerings on Percent often include exposure to international private debt investments (such as small business loans in Latin America).

Percent has funded nearly 300 offerings to date, raising $559M in financing with 274 repaid and 6 defaults (representing a 1.82% default rate). At the time of this writing there is one open investment opportunities, but there are usually several offerings open at any given time (prospective investors should note the deals usually fill up quickly).

Notable Offerings

  • Bitcoin Discovery Fund. As an investor in the Bitcoin Discovery Fund, you’ll become a fractional owner of bitcoin mines that use “flare gas” from natural gas wells to power computers mining new Bitcoin. As these bitcoin mines regularly discover new bitcoin, the bitcoin are then distributed periodically to all investors in the Bitcoin Discovery Fund. Minimum investment is $5,000. Open only to accredited investors. Find out more at EnergyFunders  👈
  • DeFi Securitized Mortgage Fund. The Fund seeks to generate income by investing in a pool of short-duration mortgages that have been securitized using Decentralized Finance capital and leverage without direct correlation to cryptocurrency. Minimum investment is $50,000. Open only to accredited investors. Find out more at New Silver  👈
  • PFNF Series 81. Through the purchase of notes issued by this Pre-Funding Note Fund, LLC (PFNF), Investors can now invest in a line of credit used to pre-fund first-position mortgages originated by FTF Lending, LLC. The line of credit that PFNF issues is used by FTF Lending to originate loans prior to syndicating them on the online platform or selling to institutional whole loan buyers. Investors now have the opportunity to gain exposure to a pool of loans that are held on the line for a short duration prior to being sold. Minimum investment is $1,000. Open only to accredited investors. Find out more at Fund That Flip  👈
  • 2010 Decade Collection. This collection is an excellent source of portfolio diversity with wines from Bordeaux, Burgundy, and Ribera del Duero, Spain. The decade from 2010 to 2020 produced some of the most excellent vintages of the past 30+ years in wine-growing regions across the world. Europe fared exceptionally well, with vintages like 2010, 2015, and 2016 heralded as stellar vintages across the continent. Minimum investment is $50. Open to all investors. Find out more at Vint  👈
  • Soil Connect. SaaS platform providing dirt solutions and logistics for the construction industry  Minimum investment is $1,000. Open to all investors. Find out more at SeedInvest  👈
  • Enhanced Crypto Fund. Invest in a Fund that provides investors with easy and cost effective access to index-like exposure to five-to-ten of the largest cryptos by market capitalization. Minimum investment is $15,000. Open only to accredited investors. Find out more at YieldStreet  👈
  • Renovare Development. We are a majority woman-owned, social impact real estate development company. We focus on transformational mixed-use projects in urban areas and rural main streets that meet community needs. And we prioritize projects that are located in Opportunity Zones. Minimum investment is $500. Open to all investors. Find out more at Small Change  👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

The headline number is that US household debt is approaching a record $16T, in large part because low interest rates have helped home buyers borrow ever bigger mortgages (especially as housing inventories have remained stubbornly low). But the folks at Visual Capitalist do a lovely job (as usual) of also digging deeper to tease out the nuance in the numbers – in this case underscoring just how much student loan and auto loan debt is driving non-housing debt:

To put this in numbers, the average price of a new car has climbed from $35,600 in 2019, to over $47,000 today. Over a similar timeframe, the average price of a used car has grown from $19,800, to over $28,000.

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The Hedge Fund Journal published an in-depth look at the asset classes covered by Hedonova (read our review), which include investments in a number of the alternative asset platforms covered on YieldTalk. The piece also says that Hedonova plans to raise their minimum investment from $1,000 to $10,000 later this year. ( As a reminder, YieldTalk readers get a $50 bonus when they sign up with Hedonova):

Hedonova’s portfolio construction seeks out lowly correlated strategies including art, equipment finance, collectibles, wine, and niche real estate with a range of different return drivers and patterns. Broad brush target allocation weights range from 2% for student financing to 20% for start-ups and will fluctuate with some active trading. For instance, the strategy started out with 3% in cryptocurrencies, which at one point reached 23%, and has been regularly top sliced to keep it below 20%. Hedonova was also tactically short of cryptocurrencies in late 2021.

Startups/Venture

The “anecdata” from startups and VCs alike continues offering more signs that the funding froth in traditional VC circles is settling way down:

About a month and a half ago, I started noticing my friends in the tech startup world getting grumpier. Founders were suddenly saying that they were having trouble raising money, and VCs were grumbling that they couldn’t find good deals. That got my attention, because for over a year the story had been the exact opposite. If you don’t know a lot of people in startup-world, it’s hard to imagine just how flush with cash the whole sector has been since late 2020.

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Jason Lemkin at SaaStr highlights a disconnect between what’s happening for startups raising Seed rounds vs. what’s happening further in the funding cycle:

Most important for founders to understand is the venture “crunch” right now is everywhere except seed. If nothing else, if you’ve recently raised a seed round, assume it’s much harder than people thought last year to get that Series A. And if you are a little later stage than that, be aware it’s just plain harder. Especially, harder to get a valuation that’s a lot higher than the public comps.

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More perspective on the current “VC pullback”, this time from Matt Turck, who offers a trenchant analysis of the current interplay among public markets, traditional venture stages (seed, growth, etc.) and crypto. (Props for his excellent memes – worth a look, especially for “Succession” fans):

As tends to be the case, the correction started happening in public markets (sometime in H2 2021), then propagated down to the private venture growth market (Q1 2022), then to the Series A/B stage (currently). Venture tends to work as an assembly line, with each investor depending on the next stage (either a next round of financing or a public company IPO exit) for their short term success. As the next stage becomes trickier, the natural inclination is to slow down activity to avoid having more investments slam into a wall. It takes a few months for that cycle to happen, and for a bear market to trickle down from post-IPO to seed.

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Crowdfund Capital Advisors has published results of their survey of investment crowdfunding activity through early 2022, and there’s some useful data points about current (and likely future) dealflow across investment crowdfunding platforms:

Even though the Q1 deal value was lower than the first three quarters in 2021, the number was still greater than Q4 and exceeded pre-2021 quarterly totals dating back to 2016. CCA analysts say that investment crowdfunding deal activity will likely see a delayed reaction to the public market slowdown but will remain strong given the need for capital across the USA —a trend to watch closely in the next quarter.

Real Estate

Rents continue climbing as demand outpaces supply for apartments, with both Zillow and Apartment List reporting increases of more than 15% year-on-year, which is great news for multi-family investors:

Clearly rents are still increasing, and we should expect this to continue to spill over into measures of inflation in 2022. The Owners’ Equivalent Rent (OER) was up 4.5% YoY in March, from 4.3% YoY in February - and will likely increase further in the coming months.

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A lot of multi-family development and investment happens at the high end (like all of those luxury condos and apartments popping up in major metros), so it’s good to see coverage reinforcing that there are opportunities to earn healthy returns by investing in underserved communities, like this interview with the co-founder of Eagle Property Capital in Florida:

We are trying to have an impact on our residents lives. We are seeing also their income grow. We add value for them, for example, through programs that report payments to major credit bureaus that help boost their credit scores—that will also have an impact on their incomes

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As expected, rising mortgage rates are starting to dampen demand, with implications not only for direct home buyers and sellers, but also for investors in single-family rentals and multi-family apartments, who benefit from continued pricing power for rents as tenants who might otherwise move into their own home stay put:

We are seeing a significant change in inventory, but there is no surge in new listings. This means the increase in inventory is due to a decrease in demand, likely because of higher mortgage rates.

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This overview of new analysis out of Florida Atlantic University provides a super-interesting look at some of the dynamics playing out in the housing market right now in various major metros, and comparing them to 2007 (spoiler alert: this time it’s mostly different – unless you’re in Phoenix or Las Vegas):

What’s notable about the ongoing housing boom is the whiplash. Just two years ago, the housing market was reasonably priced relative to incomes (see chart above). In March 2020, only nine housing markets were overpriced by over 10%, according to Florida Atlantic University’s calculation. Back then, Spokane, Wash. (overpriced by 26%) was the most overpriced housing market. As of March 2022, Spokane is now overpriced by 55%—which doesn’t even put it in the top five—while 90 out of the nation’s 100 largest markets are overpriced by 10% or more.

Crypto/web3

In a recent newsletter, I called out an excellent explainer piece about web3 and crypto published by the NYT. A group of crytpo skeptics led by Mollie White has published an equally excellent annotated version of that NYT explainer piece, tempering what they see as undue boosterism in the original. Well worth a read to round out your own perspective on the topic:

Though its author, Kevin Roose, wrote that it aimed to be a “sober, dispassionate explanation of what crypto actually is”, it was a thinly-veiled advertisement for cryptocurrency that appeared to have received little in the way of fact-checking or critical editorial scrutiny. It uncritically repeated many questionable or entirely fallacious arguments from cryptocurrency advocates, and it appears that no experts on the topic were consulted, or even anyone with a less-than-rosy view on crypto.

Odds and Ends

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - March 31, 20222022-03-31T00:00:00+00:002022-03-31T00:00:00+00:00https://yieldtalk.com/weekly-roundup-03-31-2022✨ New Platform Review: New Silver DeFi

New Silver is a US-based fintech founded in 2018 and specializing in data-driven lending for the “fix and flip” real estate sector. Their newly created DeFi Securitized Mortgage Fund provides accredited investors with access to a blockchain-securitized loan portfolio.

The New Silver DeFi Securitized Mortgage Fund invests in short-term (typically “fix-and-flip”) mortgages secured with a first-priority “perfected” lien on US residential investment property. New Silver also uses leverage to expand their origination pool and boost investor returns (with a concomitant risk in the event of significant defaults).

Investors in the New Silver DeFi Securitized Mortgage Fund receive quarterly cash distributions. The target return for the fund is 17-22%, net of fees. Investments in the New Silver DeFi Securitized Mortgage Fund may be redeemed after a 1-year lockup period.

Investments on New Silver are offered through SEC Regulation D, and are available only to accredited investors. The minimum investment is $100,000. Our rating: Excellent. You can sign up for New Silver here. 👈

Notable Offerings

  • ₿ Bitcoin Discovery Fund. As an investor in the Bitcoin Discovery Fund from EnergyFunders, you’ll become a fractional owner of bitcoin mines. As these bitcoin mines regularly discover new bitcoin, the bitcoin are then distributed periodically to all investors in the Bitcoin Discovery Fund. Via EnergyFunders: “Our bitcoin mines are powered by off-grid natural gas at our wellsites; this natural gas is converted into electricity for powering our mines, giving us a cost advantage in our mining. You’ll accumulate highly sought-after bitcoin at below-market rates over the life of the Bitcoin Discovery Fund.” Minimum investment is $5,000. Open only to accredited investors. Find out more at EnergyFunders  👈
  • 🍷 Bordeaux. Any conversation of the greatest wine regions is incomplete without Bordeaux. Its legendary red blends and sweet white wines have long served as the standard by which excellence is measured. Even in an increasingly competitive industry, Bordeaux reigns supreme with the largest share of wine traded by value. For anyone new to Vinovest, the road to wine investing starts here. Minimum investment is $1,000. Open to all investors. Find out more at Vinovest  👈
  • 👩🏽‍🦰 Cria Hair. We don’t grow hair. We empower the body to give you healthier, stronger, thicker hair that lasts without any side-effects. There’s a difference. Ingredient- and science-based hair care that is so good for your body! Minimum investment is $100. Open to all investors. Find out more at Republic  👈
  • 🍇 Vista Luna Organic Vineyard Stage 2. Vista Luna Organic Vineyard represents a compelling opportunity to invest in a high cash flow, turn-key vineyard in an exciting California appellation with significant upside potential. The property is located a short distance north of the town of Clements in San Joaquin County, about 13 miles northeast of Lodi and 30 miles southeast of Sacramento. It is situated in the Borden Ranch AVA, a sub-appellation of the broader Lodi AVA, one of California’s growing wine producing regions. Minimum investment is $15,000. Open only to accredited investors. Find out more at FarmTogether  👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

Reading commentary on investing from Charlie Munger (Warren Buffett’s longtime business partner) is always entertaining, but buried in this compilation of gems from a recent appearance by the 98-year-old at the 2022 Daily Journal annual meeting was the story of how a long-profitable investment in the World Book Encylopedia dried up essentially overnight – a perfect example of Schumpeter’s “creative destruction” in action:

And then a man named Bill Gates came along and he decided he’s gonna give away a free encyclopedia with every damn bit of software in his personal computer software. And away went our $50 million a year.

Startups/Venture

A lot of startup investors are chasing the promise of “exponential growth” but Jason Cohen provides an incredibly helpful math lesson – with case studies from some of the fastest-growing companies in history – showing that reality is far more nuanced (and linear) than PowerPoint hockey-stick charts:

Inevitably it is breathlessly inducted into the class of “hypergrowth” companies that are “growing exponentially.” Especially when the product is “viral.” After all, if every person brings three friends, and each of those brings another three, is that not exponential? But “exponential” is an incorrect characterization, as we’ll see in real-world data, even for hypergrowth, “viral” companies like Facebook and Slack.

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We’ve talked before about how notoriously difficult it is for female founders to secure funding from traditional VC firms (last year barely 2% of VC funding went to female founders). Our friends at KingsCrowd have crunched the numbers across the major investment crowdfunding platforms, and the data there is considerably more promising for female founders:

Nearly 30% of all new investment opportunities on Republic had female founders, making up 46 of the 160 new equity raises for the year. Even SeedInvest – with the lowest percentage of female-led investment opportunities – topped the venture capital ecosystem with 11.6% of new raises featuring a female founder. Wefunder had the most new investment opportunities in 2021 and just over a fifth were female-founded.

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When you start looking at startup investments, you quickly encounter a confusing landscape of terminology around the actual “thing” you’re buying with your investment (unlike in the stock market, where more often than not, you’re buying, well, “stock”). ValueWalk has a useful deep dive into two of the more common security types for startup investing: convertible notes and SAFEs:

Beyond vetting the product or service and its market fit, it’s important that investors (and founders) spend real time on the infrastructure of the investments that they’re setting up. Following is a brief overview of SAFEs, convertible notes, and the pros and cons of uncapped valuations.

Crypto/web3

I’m going to keep pushing out good – and reasonably objective – crypto/web3 “explainer” pieces as I find them, because they’re so helpful for grounding (or re-grounding) oneself in the basics amid a lot of hype and cynicism. Transformative new technologies (especially financial ones) always come with a degree of hype (and some outright fraud) even as they reshape important parts of our economy and culture in unpredictable ways. The latest entry in the explainer canon come from Kevin Roose writing in the New York Times and is well worth your time to read:

Crypto! For years, it seemed like the kind of fleeting tech trend most people could safely ignore, like hoverboards or Google Glass. But its power, both economic and cultural, has become too big to overlook. Twenty percent of American adults, and 36 percent of millennials, own cryptocurrency, according to a recent Morning Consult survey. Coinbase, the crypto trading app, has landed on top of the App Store’s top charts at least twice in the past year. Today, the crypto market is valued at around $1.75 trillion — roughly the size of Google. And in Silicon Valley, engineers and executives are bolting from cushy jobs in droves to join the crypto gold rush.

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In the last newsletter we talked about how Bain Capital’s venture arm was pouring $500M into a crypto-focused investment fund. Now comes news that crypto investor Katie Haun has raised $1.5B for a new web3 venture fund:

The firm will invest through two funds: a $500 million early-stage fund and a $1 billion acceleration fund. The two funds represent the largest debut on record for investment vehicles led by a female general partner, according to data from PitchBook.

Real Estate

Years of under-building followed by massive supply-chain shocks have contributed to the dearth of supply in the housing market. New data from the census bureau shows new construction (of both single- and multi-family units) show a glimmer of hope when it comes to new construction, though unfortunately not yet enough to likely impact prices anytime soon:

For single family, many of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since many of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices ( although the buyers will be moving out of their current home or apartment once these homes are completed).

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Although supply-chain issues are no doubt a factor, a look at the cities where rent is rising fastest shows that rapid pandemic-fueled population growth is driving the biggest increases, with 5 of the top 10 cities with the fastest rent growth in Florida:

National rental asking prices have been rising for months at a breakneck pace—11% higher than they were in March of last year, according to a new report by the National Association of Realtors.

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As the housing market continues roiling, institutional investors are starting to look upmarket when it comes to single-family rental properties:

The single-family rental industry typically focuses on starter houses, pitching the suburban dream to families that lack the cash for a down payment. The push upmarket comes as rents are surging in the U.S., in part because a shortage of homes to buy has kept would-be buyers in the rental market.

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Odds and Ends

]]>Andrew Savikashttp://andrewsavikas.comNews and Links - March 14, 20222022-03-14T00:00:00+00:002022-03-14T00:00:00+00:00https://yieldtalk.com/weekly-roundup-03-14-2022Notable Offerings

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Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

⛽ It’s always puzzled me why people fixate on gas prices when they’re a relatively small part of most households’ expenses, but Ben Carlson has a nice piece on his blog that digs a bit into the psychology involved, as well as puts the recent price spike into context with overall household spending and debt levels:

Gasoline itself isn’t a huge part of household budgets, coming in at around 2.2% of total spending. It is worth noting these spending levels are from 2020 (the last time this survey was taken) but even in 2019 and 2018 the numbers were less than 3%.

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In the wake of events in Europe 🇺🇦, a lot of investors are suddenly taking another look at oil and gas drilling, and this piece from Novel Investor uses the erratic nature of “wildcat” oil project returns as a reminder that a solid investment portfolio needs to be able to withstand a lot of turbulence on the way to long-term “average” returns (similar dynamics are at work with startup investing):

The risk is being so focused on the “average” return that we ignore the lesson in the variety of returns that produced that average. Your portfolio must be built to survive the variations it’s guaranteed to experience over the years. Specifically, the worst days.

Real Estate

🔮 Even as they’ve been revising 2022 home-prices forecasts upward (the median home price is now expected to hit $384K in 2022, up from $355K), Fannie Mae is projecting price growth will ease by 2023:

If home prices do rise another 11.2%, it would mark a deceleration from the current growth rate. However, that would hardly represent relief for home shoppers. After all, the typical raise that corporate America plans to dole out this year is only 3.9%. But Fannie Mae does still think relief will come, it just won’t happen until 2023. Next year, Fannie Mae projects home prices will rise 4.2%—with the median existing home price jumping to $395,000.

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Despite the expiration of various pandemic-related mortgage forbearance programs, rising house prices and the tighter lending standards in place since the Great Recession have helped stave off the kind of foreclosure surge and buildup of REO properties (REO means “real estate owned” which means owned by a lender trying to recover their principal):

The pandemic related increase in serious delinquencies was very different from the increase in delinquencies following the housing bubble. Lending standards have been fairly solid over the last decade, and most of these homeowners have equity in their homes - and they will be able to restructure their loans once they are employed.

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As rents continue rising, the number of single-family homes purchased by investors continues climbing, now representing about 25% of homes sold:

Investors bought roughly a quarter of the single-family houses sold in the fourth quarter of 2021, according to preliminary data from CoreLogic. That’s on par with September 2021, when investors bought more than a quarter (26.2 percent) of the single-family houses sold. (CoreLogic defines an SFR investor as an individual or company who owned three or more properties simultaneously within the past 10 years, according to CoreLogic’s analysis of public data, or has a corporate or non-individual identifier on the deed.)

Startups/Venture

This article is aimed at the advisors to “family offices”, the entities that manage the finances of ultra-high-net-worth investors, but their list of seven best practices for investing in startups can mostly be applied to anyone thinking about investing in startups as part of their portfolio:

Virtually every financial advisor will tell you not to invest directly in stocks unless you’re a professional stock picker; invest in funds instead. If that’s true in the liquid, transparent public markets, then it’s even more important in illiquid, opaque private markets.

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The Crowdfunding Professional Association (CfPA) is offering a 2-hour class on startup valuation next week, aimed primarily at entrepreneurs looking to better understand how to value their own company, but the topics should be of interest to anyone who wants a better understanding of how to value a business:

This course is two hours long and taught by Professor George Pullen. Professor Pullen is an Adjunct Professor at UNH School of Law and Instructor at Columbia University in NYC where he teaches financial theory and modeling for blockchain, space and cryptocurrency business. In his day job he is the Senior Economist for the Commodities Future Trade Commission in Washington, DC and has over 20 years experience as an investment banker, trader and economist.

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🖋️ It’s been almost 10 years since the signing of the 2012 JOBS Act, which enabled the growing investment crowdfunding ecosystem. Woodie Neiss, principal at Crowdfund Capital Advisors and one of the architects of that legislation, recently appeared on the GowerCrowd podcast to talk about the JOBS Act 10 years on.

Crypto

More venture capital flowed to crypto in 2021 than the prior 10 years combined, with Bain Capital’s venture arm the latest to join the fray with a $500M crypto-focused investment fund:

A BCV representative told Cointelegraph that the goal of the crypto fund is to back entrepreneurs developing the next generation of open internet infrastructure. The spokesperson went on to say that the “dedicated investment fund” is set up with a highly technical and collaborative approach to help crypto and Web3 builders from seed through growth.

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If you’re confused about what exactly “web3” is all about (including why Bain Capital is throwing half a billion dollars at it) you’re not alone. Depending who you ask, it’s somewhere between a total scam or a generational chance to build wealth while reimagining the very architecture of the internet and our global financial system. Recode has a very helpful explainer to help separate the signal from the noise on web3:

It’s easy to dismiss all of this out of hand, especially if you’re an oldster like me who has seen tech bubbles before. But lots of interesting and important things were hatched during tech bubbles — like the web browser you’re using to read this story right now — even if people blew a lot of money on a lot of dumb stuff while the bubble was inflating. So when and if the bubbles deflate — which may be exactly what’s happening now — you can still find value in the aftermath.

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One of the hottest corners of the “web3” landscape continues to be NFTs (non-fungible tokens), and the froth is drawing increased scrutiny from the SEC amid concerns that many of the tokens on offer are essentially just securities in another form, thereby subject to SEC regulation:

A key legal question is whether digital assets including NFTs are securities, and therefore subject to the same rules as stocks. While the SEC has said that many tokens fall under its purview, some crypto enthusiasts argue regulations meant to police the equity markets shouldn’t also apply to virtual currencies.

Odds and Ends

]]>Andrew Savikashttp://andrewsavikas.com📚 5 of Our Favorite Books about Business and Investing2022-03-01T00:00:00+00:002022-03-01T00:00:00+00:00https://yieldtalk.com/5-favorite-books-business-finance-investing

“In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time — none, zero.” – Charlie Munger

Charlie Munger (the longtime business partner of Warren Buffett) has certainly known a lot more wise people than I have, but I have had the privilege of meeting hundreds of CEOs and entrepreneurs during my career, including more than a few billionaires (and 3 of the authors on this list). And I will absolutely agree that a common thread among all of them is that they are indeed voracious readers.

As you embark on your journey into the world of online alternative investing, if you’re looking to broaden your understanding of Business, Finance, and Investing, here’s 5 of my favorites to get you started:

Business Adventures: Twelve Classic Tales from the World of Wall Street, by John Brooks

Bill Gates calls this “the best business book I’ve ever read” and I can certainly see why. It’s incredibly entertaining, and takes you on a tour of some of the most dramatic case studies from business and finance in the 20th century.

Antifragile: Things That Gain from Disorder, by Nassim Nicholas Taleb

Taleb’s concepts of “convex” and “concave” risk are absolutely fundamental to understanding different kinds of investments ( here’s a blog post I wrote about that a while back), and while he can be a bit of a curmudgeon 😂, his writing is entertaining and will help you see the world in a new way.

Hackers & Painters: Big Ideas from the Computer Age, by Paul Graham

Graham is the co-founder of the famed startup incubator Y-Combinator, and there is no better primer on the Silicon Valley ethos (for better or worse) than this book. It’s hard to read this book and not want to go out and start a company.

Doing Capitalism in the Innovation Economy: Reconfiguring the Three-Player Game Between Markets, Speculators and the State, by Bill Janeway

Although Janeway built his fortune in venture capital and private equity, he also has a PhD in Economics, and sits on the faculty at Cambridge University in the UK, and this book has implications far beyond just startups.

Thinking in Systems, by Donella Meadows

This last one isn’t directly about investing, but its lessons apply one way or another to just about every facet of our lives, from interpersonal dynamics in a community (or company) to the forces that roil (and calm) supply chains. I tell people this book rewired my brain, and I mean it.

You can find more of our recommended books about business, finance, and investing here.

]]>Andrew Savikashttp://andrewsavikas.com