Alternative Investing Report - August 29, 2024

_{*as of market close August 28}

Venture capital group G Squared raised $1.1 billion for its latest fund that will buy existing shares of start-ups. While most VC funds invest in new funding rounds, so-called “secondaries funds” attempt to buy discounted shares from employees and early investors seeking liquidity.

➨ TAKEAWAY: The secondary market for private shares has been booming in the absence of IPOs and with minimal M&A activity. In June, StepStone raised the largest secondaries fund ever at $3.3 billion, and VC powerhouse Lightspeed Ventures announced a new focus on secondaries. Additionally, there are now a number of platforms offering shares of prominent startups to individuals, as the sector continues to see investor demand grow. Secondary trades are more about price arbitrage and less about getting the chance to seed the next big thing, so be cognizant about entry price and exit when playing this game.

Despite a recent slump, the price of Bitcoin is still up more than 40% this year. As a result, there are more than 172,000 people worldwide with over a million dollars of crypto assets, nearly double the 88,200 figure from last year. There are also 325 people who hold $100 million or more in crypto, and 28 crypto billionaires.

➨ TAKEAWAY: Its reputation as a get-rich-quick option is part of what has driven demand in crypto since the initial boom a decade ago. Crypto is now owned by 15% of the U.S. population, and the advent of Bitcoin ETFs has also opened the door to more investors who can have exposure to the asset without the challenges of having to custody it.

In this episode of Smart Humans, Slava Rubin talks with StockX and Fanatics Collectibles founder Josh Luber about investing into sports and culture.

🏡 Starter home boom: Pending sales of homes in the 5th-35th percentile of price, which Redfin defines as “starter homes”, grew 10.2% year-over-year, as buyers increasingly turn to more affordable properties.

🪙 SEC investigating OpenSea: The NFT marketplace announced that it received a Wells Notice from the SEC, indicating that an enforcement action may be on the way, as part of an ongoing dispute over whether NFTs count as securities.

🚀 Lemniscap’s new fund: The crypto-focused VC firm announced an oversubscribed new $70 million third fund targeting early-stage startups, as crypto VC continues to have a strong 2024.

📺 "Friends” auction: Coinciding with the 30th anniversary of the sitcom’s premiere, Julien’s Auction will be selling memorabilia from the show, including a replica of the famous Central Perk couch and a number of costumes.

🚀 Chinese startup funding drops: Venture investment in China-based startups fell to $7.4 billion in Q2, the lowest quarterly total since 2014, with the biggest decline coming at the early stages.

💍 Celebrity artifacts auction: Up for sale this weekend at Kruse GWS Auctions are 400 lots of entertainment memorabilia, including Elvis’ jewelry, and items from Prince, Brian Wilson and Aaliyah.

Yesterday, the California Assembly overwhelmingly passed SB 1047, a measure that requires companies that spend $100 million or more training AI models to develop safety measures. The State Senate had already passed the bill, so after a confirmation vote it will be up to Governor Gavin Newsom whether to sign it into law. The bill has been opposed by major AI companies such as OpenAI and Democratic lawmakers such as Nancy Pelosi and San Francisco Mayor London Breed. Perhaps surprisingly, Elon Musk spoke out in favor of it, showing there is no clear consensus across party lines on how to safeguard society as AI advances.