EXECUTIVE SUMMARY
Rising inflation, falling bond prices, choppy market conditions, and poor IPO performance have forced many investors to look for alternatives to the once coveted 60/40 portfolio. These trends, coupled with several key regulatory developments, have led to the emergence of alternative investing platforms covering a variety of asset classes – from private equity, hedge funds, commercial real estate, fine art, and even wine investments (Figure 1).
This report provides an overview of US alternatives platforms, which cater to a range of client types: some are open to non-accredited investors, others only to accredited and/or institutional investors. Certain platforms target investment advisors and other intermediaries with dedicated offerings that integrate into the intermediary’s existing workflow. These platforms are governed by various regulations, many stemming from the US Jumpstart Our Business Startups Act (the “JOBS Act”) of 2012.
Overall, US alternative investing platforms are estimated to have brought in fee revenues of just US$100 million in 2018, growing to over US$720 million in 2021 (a CAGR of 95%). Following blockbuster growth, revenues are expected to drop slightly in 2022, down to US$660 million.
The market’s growth is exciting, though many questions remain. Do alternatives platforms have the power to continue at their current pace, or will obstacles begin to form in the way? Already, startup valuations have begun to re-price in response to interest rate hikes. Real estate markets have undoubtedly been affected by this too. And more eternal concerns around the opacity and low success rate of startups and small businesses make private markets investments especially risky.
Barriers to entry remain low, and the operational costs of servicing a large number of small accounts are some of the challenges these platforms may face. Opimas discusses the ways in which alternatives platforms can differentiate themselves and improve cost structures.
Figure 1. Alternative investing platforms cover a wide range of asset classes
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Mentioned in this report: Landa, SMBX, Rally, Otis, Groundfloor, Fundrise, Vint, Republic, WeFunder, Titan, Steward, StartEngine, PeerStreet, Netcapital, MicroVentures, Mainvest, Here, Arrived Homes, SeedInvest, LEX Markets, Sweater, Percent, Composer, Vinovest Cadre, AngelList Venture, YieldStreet, Roofstock, RealtyMogul, Fund That Flip, EquityMultiple, Linqto, EquityZen, EquityBee, Masterworks, FarmTogether, AcreTrader, RealCrowd, iintoo, iCapital, Entoro, CrowdStreet, CaskX, CAIS, Allocate, Forge, Equi, Nasdaq Private Market, JP Morgan Capital Connect, Carta, Castle Placement, Caplight