Alternative Investing Report - October 18, 2024

Happy Friday. PE firms are turning to secondary deals, the AI content wars continue, an eight-figure dinosaur skeleton is up for auction, and homebuilder confidence is on the rise. Let’s dive in!

🎤 Listen: A new episode of Smart Humans is out, featuring Andrew Luong of Doorvest talking about turnkey real estate investing.

Today’s issue is brought to you by Elf Labs, Classic Characters Reimagined with Revolutionary Technology.

📈 DAILY MARKETS

*as of 10/17; Sources: S&P, BTC, FTSE, DJRE, 30YM

💵 PE SECONDARIES


Private equity firms are increasingly turning to secondary deals to generate liquidity for investors, after several years of higher interest rates led to a slowdown in exit activity. These deals, where firms sell their stakes in companies to new investors, are estimated to reach between $145 billion and $150 billion of volume, which would be an all-time record. Secondary sales now make up around 14% of all exit activity, which is triple the proportion from 2020.

TAKEAWAY: The rise in secondary activity in PE mirrors the rise in secondary activity in the VC world, where funds are buying up discounted shares of private companies from investors and employees seeking liquidity. Numerous firms have raised billion-dollar secondaries funds this year, and in June StepStone raised the largest VC secondaries fund ever at $3.3 billion. This trend should only continue as companies stay private longer and both PE and VC firms have struggled to return capital to their investors.

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🤖 AI CONTENT WARS

The New York Times sent AI startup Perplexity a cease-and-desist notice, demanding that the company stop using the newspaper’s content to train its models. Perplexity has previously faced accusations of plagiarism from Wired and Forbes, and is one of many AI startups accused of scraping copyrighted data from publishers. The New York Times has also sued OpenAI, one of many media companies to do so.

➨ TAKEAWAY: The battle between media companies and AI startups is going to continue until a legal standard is set. Generative AI is highly reliant on content to train their models on, but it’s those exact industries that produce the content that AI is likely to disrupt. Investors need to understand how and where a company gets its content, and what kind of legal liability they could be facing.

🎤 PODCAST

In this episode of Smart Humans, Slava Rubin talks with Doorvest CEO and co-founder Andrew Luong about how to make passive income with real estate and avoid dealing with tenants.

📰 NOTABLE NEWS

(Barbarossa Auctions)

🦕 Dinosaur skeleton: “Vulcain,” a 67-foot long Apatosaurus, is the largest and most complete dinosaur skeleton ever offered at auction, and carries an estimated value of $11 million - $22 million. It will be auctioned on November 16 in Paris.

🏡 Homebuilder confidence rises: The NAHB/Wells Fargo Housing Market Index of builder confidence increased two points this month, moving from 41 to 43, slightly above expectations.

🚀 Another big chip raise: Lightmatter, a startup that builds computer chips that process information with light, raised $400 million at a $4.4 billion valuation, well above the $1.2 billion valuation in its last raise in December 2023.

🎨 Art Basel Paris: Gallery sales on Art Basel Paris’ VIP day were strong, including seven-figure deals for artwork by Mark Bradford, Alice Neel and Tom Wesselmann.

🏢 Prologis tops estimates: The largest industrial real estate firm in the world saw better-than-expected results in Q3, as it saw an increase in leasing activity and occupancy rates stayed strong at 95.9%.

🪙 Crypto city: Praxis, a project that aims to build a crypto and AI-focused city, raised $525 million, with $500 million of that coming from digital asset investment firm GEM Digital. The potential location for the city has not been made public as of yet.

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📝 IN CASE YOU MISSED IT

Have a great weekend!

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