YieldStreet stands out among crowdfunding investment platforms by offering a wide range of asset-backed debt investments with relatively short hold times, from litigation financing to commercial real estate to more exotic investments like a loan backed by the contract of an NBA player.
- Most investments are cash-flowing and all are secured with assets
- Short and medium hold-terms (usually 12-26 months)
- Many offerings are "pre-funded", which means less time waiting for interest payments to start
- Company Description: YieldStreet connects investors to originators with deep expertise in alternative lending.
- Website: https://yieldstreet.com
- Alexa Rank: 451,492 (updated weekly)
- Founded: 2015
- YieldStreet on Twitter (@yieldstreet)
- YieldStreet on Crunchbase
- YieldStreet (or their affiliated partner) on the SEC's Advisor Search
Most of the new crowdfunding investment platforms focus on a particular type of investment (eg, Prosper in consumer debt; Fundrise in Real Estate; FundersClub for startups). And even within each category, there’s often further specialization — for example, among real estate sites, some focus on residential, others commercial. Understandably, the goal seems to be to clearly define a niche in order to stake out territory within the broader market.
YieldStreet seems to be taking a different approach, and it’s become one of my favorites to watch in terms of new opportunities. Their focus isn’t on a particular asset class, but instead they look at a wide range of secured investments with relatively short hold times.
Types of investments YieldStreet offers
The offering types available at any given time vary quite a bit, but all of YieldStreet's investments are asset-backed debt offerings. A few recent investments include:
- Accounts Receivable financing
- A loan to an NBA player (secured by his multi-million-dollar contract)
- “Hard money” lending (short-term loans to real estate investors)
- Loans to fund ridesharing fleets (secured by the cars)
- A range of litigation financing (secured by the expected judgment, kinda like a Receivable)
Investments on YieldStreet typically have hold times of 1-3 years.
What do you get when investing with YieldStreet?
As with many of the Reg D investment platforms, an SPV (special purpose vehicle) is created for each investment, typically an LLC. Investors receive a membership interest in the LLC equivalent to their proportional investment. For example, if you invest $5,000 out of a $100,000 total raise, you would receive a 5% ownership interest in the LLC created for the investment.
You are also then entitled to a proportional share of the interest payments as well -- in that example, you'd receive 5% of the interest payments made by the borrower in a given period.
YieldStreet fee structure
Fees vary per offering. In some cases, a flat fee is charged to the offering sponsor (and if so that is disclosed on the offering page). YieldStreet also collects a management fee on all offerings, which varies from 1-4% annually. All advertised returns are shown net of fees.
Potential returns and cashflow
Most investments on YieldStreet pay regular monthly or quarterly interest payments (and some also include principal payments), which are automatically deposited back into your bank account. Investments are usually between 12-36 months.
Some of the investments (particularly in litigation finance) have what are known as "event-based" payments. For example, you would receive payments as cases are settled through the civil court system.
Breadth of offerings on YieldStreet
YieldStreet emphasizes their curatorial role in selecting offerings, and that usually means there are only a few offerings available at any given time. Lately most of their offerings have been in commercial real estate or litigation finance (via a partnership with LawCash). YieldStreet offerings often sell out quickly, so you may want to review past offerings and/or ask YieldStreet for more details about prior investments similar to the kinds you'd like to invest in to help get familiar with the terms and documents.
Regulatory framework and due diligence expectations
YieldStreet is affiliated with YieldStreet Management, LLC, which is a Registered Investment Advisor registered with the SEC. Investments are offered under SEC Reg D, and are only available to accredited investors.
According to their website, YieldStreet "carefully selects each and every originator who posts deals on our platform", and they have a rather interesting “anti-investments” section, where they provide some detail about deals they didn’t choose. While it is of course fundamentally content marketing, it’s useful to hear them explain their reasoning, and helps provide some additional context for evaluating the active investments. While a platform's own efforts should ever be a substitute for your own due diligence, that curatorial approach is different from some other platforms offering similar investments, which function more like straight marketplaces.
YieldStreet is a fun platform to watch, as you're never quite sure what kind of investments they'll have available next. You can read more about my own investing experience with YieldStreet over on the blog.