Alternative Investing Report - January 23, 2025

*as of 1/22; Sources: S&P, BTC, FTSE, DJRE, CL50

Private equity firms have often employed the strategy of “rolling-up” companies - buying multiple small businesses and combining them into one bigger umbrella company to increase efficiency and unlock economies of scale. Now, VC firms such as General Catalyst and 8VC are mimicking the strategy, buying services startups and “rolling” them up. Conversely, some PE firms are launching secondaries funds, usually more associated with VC. The French PE firm Ardian recently raised a $30 billion secondary fund, as the number of such funds have increased fourfold in the past five years.

➨ TAKEAWAY: Venture capital is synonymous with tech companies and risky bets on high-margin companies in emerging industries. The perception is that VC firms should make a lot of investments in the hopes that a few might hit it big. This shift by some firms shows the willingness to employ other strategies in what has been a difficult market for the asset class. Conversely, as PE firms start to hold on to attractive assets longer, they are employing a more long-term VC mindset as the two industries borrow from each other’s playbooks.

Monday January 27 at 11 AM ET - join a briefing covering the $60 billion AI startup Anthropic. Vincent’s Slava Rubin and Sacra’s Jan-Erik Asplund will discuss the company’s growth, strengths, challenges, IPO prospects, and much more.

Christie’s Jeff Beck Guitar Collection auction was a rousing success, with 128 of 133 lots selling for a total of $10.75 million, significantly above the pre-auction estimate of $1.85 million. Every lot that sold fetched more than the high estimate, with some lots exceeding it by 30-50x. The highest sale belonged to a 1954 Gibson Les Paul guitar known as “The Oxblood” which went for $1.3 million against a pre-sale estimate of $615,000. The most shocking sale was the other seven-figure one, a custom Fender Stratocaster known as “Anoushka” that sold for $1.23 million compared to its pre-sale estimate of $37,000.

➨ TAKEAWAY: Music memorabilia is having a moment, with Julien’s Bob Dylan auction last week and now this auction blowing past expectations. While Jeff Beck is a legendary guitarist, his name recognition is not at the same level as Dylan, so these results were more of a surprise. It is clear that the provenance of his guitars mattered significantly to collectors, who continue to show that they will shell out for unique items tied to important entertainers.

🏡 Rising inventory: The number of homes on the market in December were the most for any December since 2019, which was also the last time that Zillow’s Market Heat Index showed a neutral market in December.

🚀 Meta invests in Databricks: The tech giant was a part of the software startup’s record-setting $10 billion funding round, and the two companies are working together to develop AI models. Databricks CEO Ali Ghodsi also said he would not be surprised if Databricks goes public in the next year.

🪙 Checking in on Melania coin: The official memecoin of the First Lady is down 50% since its launch last Sunday and 73% from its peak, underscoring the risk and volatility inherent in memecoins.

💵 Oaktree launches private credit fund: The asset manager is allowing high net-worth individuals in Europe, Latin America, and Asia access to its new semi-liquid fund consisting of a diversified portfolio of global private credit investments.

⚾ Fanatics to open London store: The collectibles company is planning to open a 5,500 square foot store on famed Regent Street, in an effort to grow the industry’s footprint in the UK and Europe.

🪙 Banks ready for crypto: Bank of America CEO Brian Moynihan said that the banking industry will allow payments with crypto as soon as regulators allow it to do so, which would be another step towards integrating crypto into the mainstream.

Oscar-frontrunner “The Brutalist” has been facing criticism in the past week for the use of AI to improve the Hungarian accents of lead actors Adrien Brody and Felicity Jones. Brody and Jones play Hungarian immigrants to the U.S. in the film, and director Brady Corbet and editor Dávid Jancsó used a tool from the AI company Respeecher to “refine certain vowels and letters for accuracy.” Additionally, generative AI was used to create architectural drawings meant to be created by the architect main character of the film. With the use of AI in Hollywood remaining controversial, it will be interesting how these revelations may impact the film’s Oscar chances, and the backlash may dissuade future filmmakers from employing similar tools.