Alternative Investing Report - November 26, 2024

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*as of 11/25; Sources: S&P, BTC, FTSE, DJRE, CL50

Venture capital distributions are at a historic low, as net cash flows have been strongly negative for the third year in a row. In 2023, VC firms invested $60 billion more than they collected, and 2024 is on track for more of the same. The slowing IPO and M&A markets, along with startups staying private for longer, has resulted in investors not seeing significant cash.

➨ TAKEAWAY: The gains are still there - as an example, Sequoia Capital marked up its 2020 Venture XVII fund by 24.6% despite not yet seeing any exits. Investors now have paper gains from AI investments as well as the big runup in 2021, but they have seen little in the way of actual returns over the past few years. With institutional investors hesitant to commit more capital while waiting for distributions, VC firms like Sequoia are increasingly targeting high-net-worth individuals when fundraising.

Home prices are projected to rise 2.6% next year, according to Zillow’s 2025 housing market forecast. This is a slightly slower pace of growth than the market has seen this year, and would represent the lowest rate in over a decade. As a result, the number of metro areas that are buyer’s markets will increase, with cities in the Southwest primed to follow those in the Southeast .

➨ TAKEAWAY: Ultimately, how the housing market does in 2025 is going to be largely dependent on how much mortgage rates come down, if at all. Even a brief decline spurred a significant uptick in activity, so there are a lot of potential buyers and sellers still waiting for rates to drop. There have been recent upticks in both supply and demand, but if rates come down to the 6% range next year, expect housing to heat up.

In this episode of Smart Humans, Slava Rubin talks with Solana co-founder Raj Gokal about building the 4th biggest cryptocurrency, navigating the asset class, and his outlook for 2025.

💵 Yieldstreet looking for funding: The alternative asset investment platform is reportedly targeting a $75 million - $100 million fundraising round or potentially a sale.

🪙 Tron founder & WLF: Justin Sun, the crypto billionaire who just paid $6.2 million for a banana, announced a $30 million investment into the Trump family’s crypto project, World Liberty Financial, becoming the largest investor so far.

🚀 Giannis’ VC fund: Milwaukee Bucks superstar Giannis Antetokounmpo became the latest high-profile athlete to launch a venture fund, Build Your Legacy Ventures, which is making its first investment in an undisclosed women’s basketball business.

🎨 Stubbs dog painting: British painter George Stubbs’ “The Spanish Pointer” is expected to sell for $1.9 million - $2.5 million at auction next month, after last selling for around $70,000 in 1972.

🏡 Investor home purchases: After skyrocketing during the pandemic to nearly 100,000 homes per quarter, investor home purchases have dropped to around 50,000 per quarter, representing 16% of overall homes sold in Q3.

📖 The Prince: One of only eleven known first editions of the 16th century Machiavelli classic, and the only one in private hands is coming to auction at Sotheby’s and carries an estimate of $375,000.

A 185-acre farm and vineyard in Columbus, NJ, about 30 miles northeast of Philadelphia, just hit the market, along with 18,000 bottles of wine. The property has a 10.5 acre vineyard, a fully operational winemaking facility and a total of 19 buildings including a 5,000 square foot tasting room and an 11,000 square foot manor. The main house has 11 bedrooms, 4.5 bathrooms and can be the owner’s residence or be converted into a bed-and-breakfast. The asking price is $6.5 million for the property, which includes the winemaking business and the rental income from the 150-acre farm.