YieldTalk news and links - 31 March 2022
This week: Invest in mortgages on the blockchain; invest in off-grid Bitcoin mines; top 10 US cities for rent growth
✨ New Platform Review: New Silver DeFi
New Silver is a US-based fintech founded in 2018 and specializing in data-driven lending for the “fix and flip” real estate sector. Their newly created DeFi Securitized Mortgage Fund provides accredited investors with access to a blockchain-securitized loan portfolio.
The New Silver DeFi Securitized Mortgage Fund invests in short-term (typically “fix-and-flip”) mortgages secured with a first-priority “perfected” lien on US residential investment property. New Silver also uses leverage to expand their origination pool and boost investor returns (with a concomitant risk in the event of significant defaults).
Investors in the New Silver DeFi Securitized Mortgage Fund receive quarterly cash distributions. The target return for the fund is 17-22%, net of fees. Investments in the New Silver DeFi Securitized Mortgage Fund may be redeemed after a 1-year lockup period.
Investments on New Silver are offered through SEC Regulation D, and are available only to accredited investors. The minimum investment is $100,000. Our rating: Excellent. You can sign up for New Silver here. 👈
- ₿ Bitcoin Discovery Fund. As an investor in the Bitcoin Discovery Fund from EnergyFunders, you’ll become a fractional owner of bitcoin mines. As these bitcoin mines regularly discover new bitcoin, the bitcoin are then distributed periodically to all investors in the Bitcoin Discovery Fund. Via EnergyFunders: “Our bitcoin mines are powered by off-grid natural gas at our wellsites; this natural gas is converted into electricity for powering our mines, giving us a cost advantage in our mining. You’ll accumulate highly sought-after bitcoin at below-market rates over the life of the Bitcoin Discovery Fund.” Minimum investment is $5,000. Open only to accredited investors. Find out more at EnergyFunders 👈
- 🍷 Bordeaux. Any conversation of the greatest wine regions is incomplete without Bordeaux. Its legendary red blends and sweet white wines have long served as the standard by which excellence is measured. Even in an increasingly competitive industry, Bordeaux reigns supreme with the largest share of wine traded by value. For anyone new to Vinovest, the road to wine investing starts here. Minimum investment is $1,000. Open to all investors. Find out more at Vinovest 👈
- 👩🏽🦰 Cria Hair. We don’t grow hair. We empower the body to give you healthier, stronger, thicker hair that lasts without any side-effects. There’s a difference. Ingredient- and science-based hair care that is so good for your body! Minimum investment is $100. Open to all investors. Find out more at Republic 👈
- 🍇 Vista Luna Organic Vineyard Stage 2. Vista Luna Organic Vineyard represents a compelling opportunity to invest in a high cash flow, turn-key vineyard in an exciting California appellation with significant upside potential. The property is located a short distance north of the town of Clements in San Joaquin County, about 13 miles northeast of Lodi and 30 miles southeast of Sacramento. It is situated in the Borden Ranch AVA, a sub-appellation of the broader Lodi AVA, one of California’s growing wine producing regions. Minimum investment is $15,000. Open only to accredited investors. Find out more at FarmTogether 👈
Worth Reading this Week
A roundup of insights and interesting links from around the investment crowdfunding ecosystem.
Reading commentary on investing from Charlie Munger (Warren Buffett’s longtime business partner) is always entertaining, but buried in this compilation of gems from a recent appearance by the 98-year-old at the 2022 Daily Journal annual meeting was the story of how a long-profitable investment in the World Book Encylopedia dried up essentially overnight – a perfect example of Schumpeter’s “creative destruction” in action:
And then a man named Bill Gates came along and he decided he’s gonna give away a free encyclopedia with every damn bit of software in his personal computer software. And away went our $50 million a year.
A lot of startup investors are chasing the promise of “exponential growth” but Jason Cohen provides an incredibly helpful math lesson – with case studies from some of the fastest-growing companies in history – showing that reality is far more nuanced (and linear) than PowerPoint hockey-stick charts:
Inevitably it is breathlessly inducted into the class of “hypergrowth” companies that are “growing exponentially.” Especially when the product is “viral.” After all, if every person brings three friends, and each of those brings another three, is that not exponential? But “exponential” is an incorrect characterization, as we’ll see in real-world data, even for hypergrowth, “viral” companies like Facebook and Slack.
We’ve talked before about how notoriously difficult it is for female founders to secure funding from traditional VC firms (last year barely 2% of VC funding went to female founders). Our friends at KingsCrowd have crunched the numbers across the major investment crowdfunding platforms, and the data there is considerably more promising for female founders:
Nearly 30% of all new investment opportunities on Republic had female founders, making up 46 of the 160 new equity raises for the year. Even SeedInvest – with the lowest percentage of female-led investment opportunities – topped the venture capital ecosystem with 11.6% of new raises featuring a female founder. Wefunder had the most new investment opportunities in 2021 and just over a fifth were female-founded.
When you start looking at startup investments, you quickly encounter a confusing landscape of terminology around the actual “thing” you’re buying with your investment (unlike in the stock market, where more often than not, you’re buying, well, “stock”). ValueWalk has a useful deep dive into two of the more common security types for startup investing: convertible notes and SAFEs:
Beyond vetting the product or service and its market fit, it’s important that investors (and founders) spend real time on the infrastructure of the investments that they’re setting up. Following is a brief overview of SAFEs, convertible notes, and the pros and cons of uncapped valuations.
I’m going to keep pushing out good – and reasonably objective – crypto/web3 “explainer” pieces as I find them, because they’re so helpful for grounding (or re-grounding) oneself in the basics amid a lot of hype and cynicism. Transformative new technologies (especially financial ones) always come with a degree of hype (and some outright fraud) even as they reshape important parts of our economy and culture in unpredictable ways. The latest entry in the explainer canon come from Kevin Roose writing in the New York Times and is well worth your time to read:
Crypto! For years, it seemed like the kind of fleeting tech trend most people could safely ignore, like hoverboards or Google Glass. But its power, both economic and cultural, has become too big to overlook. Twenty percent of American adults, and 36 percent of millennials, own cryptocurrency, according to a recent Morning Consult survey. Coinbase, the crypto trading app, has landed on top of the App Store’s top charts at least twice in the past year. Today, the crypto market is valued at around $1.75 trillion — roughly the size of Google. And in Silicon Valley, engineers and executives are bolting from cushy jobs in droves to join the crypto gold rush.
In the last newsletter we talked about how Bain Capital’s venture arm was pouring $500M into a crypto-focused investment fund. Now comes news that crypto investor Katie Haun has raised $1.5B for a new web3 venture fund:
The firm will invest through two funds: a $500 million early-stage fund and a $1 billion acceleration fund. The two funds represent the largest debut on record for investment vehicles led by a female general partner, according to data from PitchBook.
Years of under-building followed by massive supply-chain shocks have contributed to the dearth of supply in the housing market. New data from the census bureau shows new construction (of both single- and multi-family units) show a glimmer of hope when it comes to new construction, though unfortunately not yet enough to likely impact prices anytime soon:
For single family, many of these homes are already sold (Census counts sales when contract is signed). The reason there are so many homes is probably due to construction delays. Since many of these are already sold, it is unlikely this is “overbuilding”, or that this will impact prices (although the buyers will be moving out of their current home or apartment once these homes are completed).
Although supply-chain issues are no doubt a factor, a look at the cities where rent is rising fastest shows that rapid pandemic-fueled population growth is driving the biggest increases, with 5 of the top 10 cities with the fastest rent growth in Florida:
National rental asking prices have been rising for months at a breakneck pace—11% higher than they were in March of last year, according to a new report by the National Association of Realtors.
As the housing market continues roiling, institutional investors are starting to look upmarket when it comes to single-family rental properties:
The single-family rental industry typically focuses on starter houses, pitching the suburban dream to families that lack the cash for a down payment. The push upmarket comes as rents are surging in the U.S., in part because a shortage of homes to buy has kept would-be buyers in the rental market.
Odds and Ends
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