Alternative Investing Report - January 28, 2025

*as of 1/27; Sources: S&P, BTC, FTSE, DJRE, CL50

U.S. startup seed funding totaled $13.2 billion in 2024, down slightly from $13.9 billion in 2023, but with a smaller decline from 2021 peaks than early and late-stage funding rounds. While there are fewer rounds in total, a greater proportion now exceed $5 million or more. The startup categories that saw the biggest gains in seed funding in 2024 were AI, robotics, legal tech, and accounting and tax prep. On the other side, industries that saw the biggest declines in seed funding included food and beverage, cannabis, VR, and e-commerce.

➨ TAKEAWAY: On the whole, seed funding has gotten harder to come by for founders, and the jump from seed to Series A has become even more difficult. VCs are focusing their dollars on what they see as surer things, opting for fewer, but larger, bets. Automation and AI were big plays in 2024 and that trend is poised to continue in the year ahead, but cannabis and VR are cautionary tales of previously hot sectors that quickly fell out of favor.

Vincent CEO Eric Cantor and Sacra co-founder Jan-Erik Asplund looked at Anthropic, the American AI startup behind LLM model Claude. They talked about the company’s rapid growth, the competitive landscape in AI, and how the recent emergence of DeepSeek could impact Anthropic's trajectory.

Barrett-Jackson’s Scottsdale car auction was a rousing success, with a record-breaking $198 million in sales. Notable sales included the first 2025 Chevrolet Corvette ZR1 produced, VIN 001, which sold for $3.7 million, and Ken Block’s “Hoonitruck,” which fetched $990,000. RM Sotheby’s auction had an impressive 95% sell-through rate and $31.6 million in sales, including seven cars that exceeded $1 million.

➨ TAKEAWAY: The auctions kicked off 2025 in a big way, leading to hopes this year will be a strong one for collector cars. An interesting wrinkle in the week was a luxury real estate auction put on by Sothebys’ Concierge Auctions arm, which had a 100% sell-through rate. This demonstrated a clear overlap between high-end collector cars and luxury real estate, and could lead to further, bigger events combining the two.

🤖 DeepSeek fallout: The Chinese AI startup’s successful new model sparked a major sell-off of AI-related stocks and led to the largest single-day market cap loss in history, with Nvidia’s value dropping $589 billion as its share price fell by 16.9%. Overall, the tech-heavy Nasdaq fell by 3% and the S&P 500 fell by 1.5%.

🪙 Bitcoin falls below $100K: The crypto market was also affected by the DeepSeek news as traders unloaded risky assets, with Bitcoin falling nearly 8% to under $98,000 before rebounding by the end of the day to $103,000 for a net 2% drop.

🏡 New home sales up: The rate of new home sales in December rose by 3.6% monthly and 6.7% year-over-year, while their median price was up 2.1% year-over-year, both good signs for the housing market.

🚀 Oracle to buy TikTok?: A group of investors including Oracle and Microsoft are reportedly in talks with TikTok parent company ByteDance to purchase the social network, with ByteDance retaining a minority stake but Oracle controlling the data collection that led to national security concerns.

💵 PE-backed bankruptcies: A record number of private equity and venture capital backed companies filed for bankruptcy in 2024, due to higher interest rates and crippling debt loads.

🏡 Foreclosure auctions fall: The supply of distressed properties at foreclosure auctions hit a three-year low in Q4, a strong sign for the economy but not good for investors looking to find deals.

Downtown Detroit’s resurgence has been one of the biggest stories in commercial real estate over the past couple of years, and a Class-A, 21-story office building is hitting the auction block. Tower 600 of the Renaissance Center complex is a 334,000 square foot building located on the shore of the Detroit River with an on-site parking garage. The building is only 11% occupied at the moment, which could position it as a future corporate headquarters. There is a planned redevelopment of the complex, with two of the other buildings slated to be torn down and one converted into residential units. The starting bid is $2.75 million and the auction begins on March 17.