The founder and CEO of alternative investment platform Alt speaks with Boardroom about the growth and evolution of the business amid the emergence of collectibles as uniquely viable portfolio assets.
Alt has a stated mission to transform investing by unlocking the value of alternative assets with the power of emerging technology.
The company’s three lead products is an alternative asset exchange, an innovating lending tool, and collectible funds divided into three verticals; the Alt Sports Card Fund, the Alt Video Game Fund, and the Alt Luxury Watch Fund. As of September, Alt has raised over $300 million, a combination of both debt and equity that includes a $200 million warehouse line of credit led by Atalaya Capital Management as part of Alt Advance, the lending tool that enables investors to borrow cash against their vaulted assets without having to sell them.
This unique combination of offerings attracted huge names like Kevin Durant, Giannis Antetokounmpo, and Tom Brady to invest in the company founded by Leore Avidar.
So, why does the model appeal to sports and business superstars alike?
“For the same reason it appeals to me,” Avidar told Boardroom. “A big part of it is the nostalgia factor. Maybe they collected when they were a kid, or it just reminds them of when they were a kid. And the deal-making of it, being able to trade and bringing together a community of people from all different types of businesses. All these investors made money in a lot of different ways, so I really enjoy learning from them.”
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A lot of the funds, Avidar said, were meant for building out Alt’s web and mobile apps. The main product is still the core exchange, where someone sends their asset, Alt stores it in a secure vault facility, digitizes the collectible, and puts it online. Through the Alt Value feature, a machine learning model appraises the asset, which can then be listed on the exchange; this is technology the company has slowly been building over time.
Looking ahead, an expansion of Alt’s offerings beyond the exchange in order to compete with established giants in the collectibles space like Beckett and eBay underscores Avidar’s aspirations to be much bigger.
“The big bet we’re making is that the segment of the market that is buying, investing, and collecting in these collectibles is also unbanked, so they’re not getting the financial and liquidity products that people who are investing in stocks and bonds have,” Avidar said. “A common pattern we hear from our customers is that they have a really hard time buying real estate and getting mortgages, so just being able to offer products that’ll accelerate the liquidity in the market are all related to one another — it gives people really quick liquidity so they can go buy a home, pay for an education or any other expenses they might have. The exchange itself is where everything’s happened, but the other two products fuel it.”
Avidar previously worked on sales and trading at CitiGroup, specializing in mortgage-backed securities and exotic derivatives like custom securities. Based on that experience, he’s familiar with the risk Alt took on when it introduced this new lending functionality.
“Risk is all about understanding how to size the risk,” he said. “Once we can size the risk, we can price it correctly. I’m pretty familiar with this model, having been around finance my entire life. I’m actually pretty comfortable with it.”
The company’s website explains that Alt’s three funds, the first of which launched roughly 18 months ago, have outperformed the S&P 500, perhaps offering something that’s more secure than the volatility of the current market (and not pegged to how a traditional index like the S&P performs in any event). Alt has a handful of full-time staffers solely devoted to the fund, which tries to purchase the top 1% of collectibles in each of the sports card, watch, and video game verticals. Figuring out the top 1% in each sector is all about anticipating demand and the trends that drive it. In sports cards, top sellers are GOATs like Michael Jordan or Kobe Bryant — or players who are on their way to becoming them, like Antetokounmpo.
“You’ve got to go and talk to people and see what people are collecting, why they’re investing, how their mindset works,” Avidar said. “Same thing with watches: What are people’s tastes? Which brands are most popular? We do that for every single category, and that leads us to what the 1% might be. We also take bets on what we think is going to be a top asset.”
Alt is a big believer in watches, Avidar said, because of their long-established value and the size of the average transaction. Vintage video games, he said, are more of an experiment because they represent a newer segment by comparison, but the CEO noted that these segments may ultimately prove more appealing to Alt’s younger-skewing demographic that understands how mobile works and is crypto-friendly.
Over the coming months and years, Leore Avidar wants to scale out sports cards, other trading cards, and lending in funds, incrementally building out features to make each one of them better.
“We want to blow them out,” Avidar said. “We want everyone to get exposure to this category. If you’re looking for yield, this is one of the best places to get it.”
The most important thing for Alt is ensuring the number of transactions and the overall liquidity are growing in this $18 billion high-end collectibles market.
“The new asset class is growing, so I think we’re going to help the new generation build some wealth in really interesting ways,” Avidar said. “This new generation will be using a new set of tools. I’m pretty confident that Alt will be in that mix.”
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