Alternative Investing Report - December 13, 2024

*as of 12/12; Sources: S&P, BTC, FTSE, DJRE, 30YM

After pricing its IPO at $71 per share, above the expected range, ServiceTitan’s first day of trading saw the share price climb a staggering 42% to $101 by day’s end. This puts the value of the cloud software company for contractors at $8.9 billion, above its last private valuation of $7.6 billion in 2022, putting those venture investors in the black. ServiceTitan reported a net loss of $92 million on $363 million in revenue in the first half of 2024.

➨ TAKEAWAY: This is the first significant VC-backed startup to go public since Reddit and Rubrik debuted in March and April. The freeze of the IPO market has been difficult for VC firms seeking liquidity, but this result could mark the beginning of a thaw. It is clear that public markets are interested in tech again, and the successful debut of an unprofitable company could make the IPO route more desirable for other late-stage startups.

In the newest episode of Smart Humans, Slava Rubin talks with Nectar co-founder and CEO Derrick Barker about investing into real estate debt, how to underwrite multifamily buildings and picking the next hot real estate market.

Colorado Springs is the hottest housing market for 2025 according to Realtor.com, with existing-home sales projected to increase by 27% compared to the projected national average of 1.5%. Miami came in 2nd, followed by Virginia Beach, Richmond, and McAllen, TX. Sixteen of the top twenty are in the South or Texas, as the Sun Belt is poised to see more market activity than the rest of the country.

➨ TAKEAWAY: Most of the top markets are relatively affordable, due in part to a glut of new construction that has increased supply and kept prices from rising. They also tend to have a younger population with higher rates of eligibility for FHA and VA loans, lessening the impact of higher mortgage rates.

🦕 Dinosaur trio: A pair of Allosaurus skeletons sold for $10.3 million and a Stegosaurus skeleton went for $5.4 million as the Christie’s “Jurassic Icons” auction came in at the high end of expectations.

🎨 Old Masters recap: Sotheby’s Old Masters and 19th Century auction last week generated $30.6 million in sales, above the high estimate of $25 million, led by a $12.6 million Botticelli painting. Christie’s Old Masters sale also beat expectations, fetching $18 million against a high estimate of $13.5 million as younger, newer collectors are starting to warm to older works.

🏡 Build-to-rent: There are around 90,000 build-to-rent properties currently under construction, with the vast majority in the South and West, as demand for single-family rentals grows nationwide.

🚀 Tax service startups: More and more venture funding is going to wealth management startups that aim to save people money on taxes, whether it’s through tax-saving accounts, tax planning and strategy, or direct indexing.

🏈 NFL private equity: Only months after the league approved private equity investment, Ares Management led a deal for 10% of the Miami Dolphins at an $8.1 billion valuation, while Arctos Partners led a deal for 10% of the Buffalo Bills - terms for the latter were not disclosed.

💵 Fewer hedge funds: Just 123 new hedge funds have launched this year, putting 2024 on pace for the lowest total since at least 2000, as investors flock to alternative asset classes like venture capital, private equity and private credit.

Monday: 👠 Ruby Slippers auction, 🚀 VC funding update
Tuesday: 🏡 Emerging RE markets, 🤖 OpenAI releases Sora
Wednesday: 🚀 Merger Mondays, 🏈 Tom Brady auction
Thursday: 📊 Inflation report, 🏢 Office sales rise

Have a great weekend!