Alternative Investing Report - February 20, 2025

*as of 2/19; Sources: S&P, BTC, FTSE, DJRE, CL50

Coming into this year, confidence was high after by strong public debuts from the venture-backed companies like Reddit, Astera Labs and Service Titan along with favorable expectations about the macro. Almost two months into 2025, expectations have been tempered with Turo pulling its IPO, the few issues making it out struggling and the forward-looking pipeline growing slimmer. Chafing against Wall Street’s high expectations for growth and margins, more than 1,000 unicorns with $1 trillion invested in them are still grinding it out, utilizing means like down rounds and venture debt - which just hit an all-time high - to make it to a brighter day.

➨ TAKEAWAY: The industry’s tough times are likely to continue for another few quarters at least, especially those deployed over the last five years. The vibe is quite different, though, for companies in the AI sector. The space produces unicorns at an even faster pace, with more made in 2024 than any prior year outside of the heyday of 2021-22. Investors deploying into the 2025 vintage see a new golden era of VC emerging as the AI opportunity could dwarf the size of technology waves that came before it. Look for these mixed fortunes to continue awhile, and know that great businesses win regardless of the broader trends.

The price of Bitcoin has loitered around $95,000 since the start of the year, but there’s been several votes of confidence that promise to push the OG cryptocurrency upward over a longer time horizon. Led by Michael Saylor’s levered buying at Microstrategy, some 78 public and private companies have been loading up their balance sheets with BTC, some for a Hail Mary attempt at an outcome and others to avoid inflation. Similarly, institutions are taking a more accepting look at the asset, the most recent case being Abu Dhabi sovereign wealth fund Mubadala adding a $460 million stake.

➨ TAKEAWAY: While institutions and corporates are increasingly buying into an asset once seen as fringe at best and illicit at worst, its price has barely budged since the impressive fall run-up. Neither has the market cap of the broader $3.2 billion crypto ecosystem. Undoubtedly, corporate and institutional buying has helped the asset remain at current levels, and while it’s not clear what drives the big moves, it seems likely that this is the status quo until more macro uncertainty recedes.

In this episode of Smart Humans, Vincent founder Slava Rubin and Sacra co-founder Jan-Erik Asplund had a wide-ranging discussion about SpaceX, the most valuable private company in the world. They dug into the company’s growth, strengths, challenges and IPO prospects.

💵 Sports PE interest looks West: The flurry of private equity opportunities in sports expands as San Francisco’s 49ers consider selling a slug and firms evaluate the potential of securitizing ticket sales.

🏠 SFR’s slowdown: Single family rental construction slowed more than 8% month-on-month and almost 2% year-on-year as builders grow fearful of the impact of tariffs and struggled with intense weather.

🚀 The next big AI startup: Former OpenAI CTO Mira Murati announced her new company, Thinking Machines, which will build more capable AI systems, and repeated the playbook of poaching a team of top researchers and engineers from an industry leader to build again.

💵 Private credit goes on-chain: Invesco’s private credit fund with more than $6 billion of assets was the latest real world asset to use blockchain for easier redemption and transfer as with DigiFT.

🚜 Getting China off US farmland: New Agriculture Secretary Brooke Rollins will prioritize banning Chinese ownership of US Farmland, which could have limited impact given the US’ geopolitical rival holds less than 1% of the sector’s foreign-held assets.

🪙 Alts at an ATH: US retail investment into alternatives hit another high in 2024, with $117 billion invested, 12% above the previous high, once again demonstrating individual investors’ deep desire to hold alternative assets.

An AI-generated video of celebrities protesting Kanye West’s recent anti-Semitic social media posts went viral last week, once again igniting controversy over the unauthorized use of people’s likenesses in AI-generated content. The celebrities whose likenesses were used in the video included Scarlett Johansson, Jerry Seinfeld, Adam Sandler and Steven Spielberg. In response, Johansson released a statement calling on lawmakers to regulate the use of AI, and it’s not the actress’s first run-in with the technology. Last May, the startup OpenAI used a voice that was undeniably similar to Johansson’s voice from the movie “Her” and removed the voice after Johansson had threatened legal action.