Yieldstreet co-founders Milind Mehere (L) and Michael Weisz
Yieldstreet alternative investment platform – which aims to democratize private investment opportunities historically reserved for the top 1% – announced a $ 100 million Series C funding round on Wednesday.
For the past six years, Yieldstreet has offered users access to a category of deals that were previously reserved for institutions such as hedge funds or billionaire family offices.
Since Yieldstreet has returned over $ 960 million to investors since it was founded six years ago, the New York-based company has cut entry points for minimum investments – some as low as $ 1,000 – and expanded its variety of alternative asset classes, including Art, consumer and commercial credit legal and real estate law.
Yieldstreet – with early funder billionaire George Soros – told CNBC that the funding round will be used to expand the platform’s user base, expand investment products and penetrate international channels. In addition, part of the cash injection will be used for mergers and acquisitions and for strategic new hires.
Yieldstreet is well on its way to reaching $ 100 million in sales in 2021.
Like the retail stock trading boom during the pandemic, Yieldstreet has seen massive growth over the past 12 months. Co-founder and President Michael Weisz told CNBC the pandemic has forced people to think differently about how they manage their money.
Yieldstreet’s total customer base is around 300,000 members. New members in 2021 have already passed all of 2020, the company announced.
Investments in the platform totaled more than $ 300 million this year, exceeding nearly $ 310 million for all of 2020.
“What you saw at Covid really attracted people years and years earlier than they would otherwise take on digital investments,” said Weisz.
The average age of people investing in alternative investments is 65, while the average age of Yieldstreet is in their 30s, according to Weisz.
“This gives you 30 years to top up your assets and investments and to generate a constant income. That will change your life, ”said Weisz.
Over the next decade, Yieldstreet is targeting 50 million investors who are either accredited – those who make more than $ 200,000 a year or have a net worth of at least $ 1 million – or high-earning Millennials.
At Yieldstreet, investors can invest in individual offers or in funds with multiple transactions. Clients can invest in outside managers or buy a fund that gives them wide access to everything that Yieldstreet has to offer.
Yieldstreet offers low-risk deals (0% -4% annual return), market risk (4-8% annual return) and market plus opportunities (8-12% annual return).
Yieldstreet is known for its Prism fund, which contains a mix of the company’s relatively esoteric investments. The fund has an 8% payout ratio, which means that an investment of $ 10,000 would bring in $ 800 every year. The fund also has an annual fee of 1.5%.
The Prism fund has returned 4.45% from its inception in March 2020 to year-end.
Yieldstreet’s growth comes with challenges, particularly due to the risky nature of its investments.
As of 2021, the start-up had several debt transactions with ships going south, leaving the company with investors demanding their money and an SEC investigation.
In addition, Yieldstreet’s plans to launch the Prism Fund with the world’s largest asset manager BlackRock failed during the pandemic.
Milwaukee Bucks’ Avenue Capital co-owner and hedge fund manager Marc Lasry has long been reserved for institutional clients and high net worth individuals – until now.
Yieldstreet clients now have access to Avenue Capital through the Global Dislocation Fund.
We are “really providing products to our investors that were really reserved for multi-million dollar minimums, be it in aviation or distress or evictions or real estate opportunities and beyond,” said Weisz.
Yieldstreet is also entering secondary markets, which the founders said will add liquidity to very illiquid assets.
“If Yieldstreet really developed this cutting-edge technology and has this ever-growing audience of consumers, what does it mean if we have the ability to create liquidity in illiquid assets. Use the same technology you previously traded with to to help.” You trade the liquidity of an asset over time, “Weisz said.
Tarsadia Investments, led by former E-Trade CEO Mitch Caplan, leads the round, a division of Raymond James, KingFisher Capital, Top Tier Capital Partners and Gaingels. Existing investors, Edison Partners, Soros Fund Management and Greenspring Associates also participated in the financing round.
“The 60/40 investment model is over; people just can’t retire on bond yields less than two percent,” Caplan, president of Tarsadia, said in a statement.
Existing investors, Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft and Expansion Capital also participated in the Series C financing round.
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