YieldTalk news and links - 16 January 2022

✨ New Platform Review: FranShares – Earn passive income from franchises for as little as $500

FranShares is launching next month, and will offer low-cost fractional investments in US-based business franchises, providing passive income and appreciation potential open to any investor. FranShares was founded in 2020 by Kenny Rose, a former Merrill Lynch financial advisor who then worked for FranNet, a franchise broker (a franchise broker helps match franchise buyers with franchise opportunities).

Rose says he was inspired to start FranShares as a way to offer access to franchises as an investment class with much lower commitments of money (and time) compared with traditional franchise investment, which have startup costs well in excess of $100K, as well as the ongoing work (and expense) of managing the business, staff, etc.

The FTC-regulated franchise industry is worth more than $750B in the US, with more than 4,000 brands currently operating nearly 800,000 franchise locations.

FranShares will offer their investments through SEC Reg A+, and is open to all investors, with a $500 minimum. Our rating: Excellent. You can sign up for the FranShares waitlist here.

Notable offerings

“Twenty tiny cabins all tricked out. On a lake. Unplugged.” That’s the pitch for Retreat @ Lake Noire, an eco-friendly project raising on Small Change (read our review to build a “luxury modern” retreat on a man-made lake just outside Dallas. An 8% target preferred return plus a 60% profit share. Minimum investment is $1,000, open to all investors. Find out more at SmallChange. 👈

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Diversyfund’s (read our review) Growth REIT is now available, offering an easy way to invest in a portfolio of multi-family (apartment) buildings with a minimum investment of just $500. Open to all investors. Find out more at Diversyfund. 👈

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YieldStreet (read our review) has launched Single Family Rental Diversified Fund I, which will own a portfolio of single family rental (SFR) properties primarily located in key U.S. geographies including Atlanta, GA, Dallas, TX and Charlotte, NC, among others, with a target annualized return of 12-14% and a 30-month term. Open only to accredited investors. Find out more at YieldStreet. 👈

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🎉 As a reminder, Hedonova is still offering YieldTalk readers a $50 sign-up bonus for new investments in their alternatives hedge fund, which is effectively an immediate 5% return on a $1,000 investment 📈. Click here to claim your $50 bonus 👈

Worth Reading this Week

A roundup of insights and interesting links from around the investment crowdfunding ecosystem.

A lot of prognostication heralding “the end of Silicon Valley” has come and gone over the past 20 years, but this recent entry in the canon from Peter Yared takes a novel approach: comparing the current state of San Francisco with a once-giant tech company in terminal decline (specifically Yahoo!). I’m thrilled that it’s becoming easier to build and fund tech companies outside of the Bay Area, but I’m also reluctant to count out San Francisco just yet.

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Inflation has been a running theme around here for a while now, because, well, because of all of the inflation. Jacob Wolinsky at ValueWalk offers a helpful reminder that one of the reasons inflation is spiking is because it is measured against prices the previous year, and when the “previous year” is “the dumpster fire that was early 2021” things are bound to be weird:

Inflation is calculated based on the rise in the consumer-price index relative to the same period a year ago. Well, think about where we were a year ago: after a decline in the middle of 2020, COVID-19 had returned with a vengeance. And because vaccines weren’t yet widely available, daily COVID deaths soared, hitting a grim all-time high of 4,406 a year ago to the day (for perspective, 1,827 Americans died of the disease yesterday – still a terrible toll, but 59% lower). Not surprisingly, the economy was limping along as people stayed home and businesses closed. Unemployment was at 6.7% in December 2020.

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A good op-ed over at the Competitive Enterprise Institute advocating for the SEC to further loosen limitations related to Reg CF, arguing that the SEC’s fears of rampant fraud simply haven’t materialized:

Reg CF’s widespread success starkly contrasts the SEC’s initial hostile approach. This included then-Chair Mary Schapiro and Commissioner Luis Aguilar predicting widespread fraud and scams. … While the SEC’s newfound appreciation for Reg CF is welcome, the Commission needs to go further. Further deregulatory moves would crate more opportunities for both entrepreneurs and investors looking for new opportunities.

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🏙️ In the Spring of 2020, the scene in many urban cores felt downright apocalyptic, with shuttered storefronts and empty streets, sparking concerns of the death of the downtown as we know it. Fast forward to nearly 2 years later, and demand for downtown apartments has not only recovered, but is surging past pre-pandemic levels:

Even though the coronavirus pandemic stubbornly refuses to end, apartment investors are spending money faster than ever downtown. They are following renters who returned to downtown neighborhoods—even though many these renters still work from home in their luxury apartment towers. The percentage of apartments that are vacant in these downtown submarkets is now lower than it was before the pandemic. And average rents are rocketing higher.

Unsurprisingly, that kind of demand growth for apartments is part of a broader surge in rents across the board:

Demand for market-rate apartments in 2021 soared far above the highest levels on record in the three decades RealPage has tracked the market. Net demand totaled more than 673,000 units – obliterating the previous high set in 2000 by a remarkable 66%. Demand would have been even stronger if not for record-low vacancy, severely limiting the number of units available to rent.

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Noted VC Fred Wilson (of Union Square Ventures) offers his take on the recent selloff in stocks and its possible implications for private markets:

The capital markets have been awash in money for the entire pandemic and it has resulted in some crazy prices being paid for public stocks and for growth rounds in high-performing privately held companies. The optimist in me sees this selloff as a return to normalcy, in the capital markets and in the world we live in. It’s hard to see a return to normalcy when offices remain closed, events are being postponed or moving to virtual. But markets tend to see things first and I do wonder if the capital markets are coming back to earth in anticipation of things getting better this year.

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While fraud has been much rarer than feared in the equity crowdfunding ecosystem, scams are an inevitable – if usually rare – feature of every asset class. We like to occasionally highlight interesting ones we find as a healthy reminder to do your homework and to never invest more than you can afford to lose in any one offering. This recent one’s a doozy:

The US Securities and Exchange Commission has charged the would-be creator of a “decentralized” Amazon Web Services alternative with scamming investors out of millions. The SEC announced a complaint on Friday against Australian citizen Craig Sproule, the CEO of cryptocurrency startup Crowd Machine, which promised a global cloud computing network built on users’ computers. In reality, Sproule allegedly sent $5.8 million to South African gold mines as investors’ cryptocurrency tokens became worthless.

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Business Insider has a nice roundup of legendary investors Jeremy Grantham’s 12 best quotes since the pandemic began on the likelihood that we’re in a massive asset bubble:

Bubbles are unbelievably easy to see; it’s knowing when the bust will come that is trickier. You see it when the markets are on the front pages instead of the financial pages, when the news is full of stories of people getting cheated, when new coins are being created every month.

Odds & Ends

• Real Estate investment platform Patch of Land is no longer accepting new investors, and appears likely to shutter soon
• For a limited time Personal Capital is offering 6 months of free wealth management services
• It’s almost that time of year again! A new offer from TurboTax: File FREE: On your own, with expert help, or when an expert does your taxes. For simple tax returns only - Must file by 2/15