Access to alternative investments like art and real estate have traditionally been reserved for the affluent. These investments have been long used by sophisticated investors to diversify their portfolios as these instruments tend not to correlate with the greater stock and bond markets. Yieldstreet is an alternative investment platform that provides access to investment opportunities across many alternative investment classes including real estate, fine art, aviation, and marine. The firm offers several types of investments – non-accredited investors can invest in a diversified fund, Prism Fund, that’s managed by the firm and provides quarterly distributions while accredited investors have access to direct investments across the various opportunities that YieldStreet originates.
AlleyWatch caught up with CEO and Cofounder Milind Mehere to learn more about the company’s progress, future plans, latest round of funding, which brings the total equity funding raised to $178.5M, and much, much more.
Who were your investors and how much did you raise?
Yieldstreet announced its $100 million Series C funding round, led by Mitch Caplan, President of Tarsadia Investments and the former CEO of E*Trade. The round was joined by Kingfisher Capital, Top Tier Capital Partners, and Gaingels. Existing investors Edison Partners, Soros Fund Management, Greenspring Associates, Raine Ventures, Greycroft, and Expansion Venture Capital also participated.
Tell us about the product or service that Yieldstreet offers.
Yieldstreet is reimagining the way wealth is created by providing access to alternative investments previously reserved only for institutions and the ultra-wealthy. Yieldstreet’s mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025.
Its award-winning technology platform provides access to investment products across a range of asset classes such as Real Estate, Commercial, Consumer, Art, Marine, Legal Finance and Aviation. Since its founding in 2015, Yieldstreet has funded over $1.9 billion of investments and is committed to making financial products more inclusive by creating a modern investment portfolio.
What inspired the start of Yieldstreet?
Access to and distribution of alternative investments is fundamentally broken, leading to an income and opportunity gap. Yieldstreet was founded to help solve this problem and to enable millions of people to generate income outside the traditional stock market. In 2009, my investment portfolio was down almost 50% and I had done all the “right” things (i.e., invest in a 401K, a 529 college plan, bonds). After experiencing the frustration that resulted from overexposure to the stock market during the 2008 financial crisis and general lack of access to many income-generating alternative investments, I founded Yieldstreet alongside my cofounder Michael Weisz, who had experience in alternative investments and shared my passion for using technology for retail investors to create access to them.
How is Yieldstreet different?
We are the only platform that provides access to this broad range of alternative investment products across asset classes and strategies. Yieldstreet’s core value, Investors First, bleeds through the entire platform. Beyond offering investments, we provide members with necessary educational tools — helping ensure that all investors are educated investors able to take control of their wealth and financial futures.
What market does Yieldstreet target and how big is it?
Our target market is accredited investors and the mass affluent. In the U.S., this includes approximately 45M consumers with $41 trillion in liquid wealth.
What’s your business model?
Yieldstreet uniquely offers a multi-asset investment platform that provides access to investments in real estate, marine finance, fine art, commercial loans, legal finance among others. Investors can invest in direct individual investments or thematic funds available on Yieldstreet and earn target returns based on such investments.
Yieldstreet charges a management fee and flat fund administrative fees on such investments. In certain circumstances, Yieldstreet may also charge the originator a listing fee. All these fees are disclosed on the individual offering pages for each investment opportunity.
How has COVID-19 impacted the business??
Navigating COVID-19 provided a major proof point that Yieldstreet is a multi-cyclical platform with a resilient business model and recurring revenue, even during the dislocation presented by the pandemic.
Early on we were laser-focused on prioritizing and focused on what we could control, guided by our ‘true North’. We took decisive steps to understand the dislocations created by the pandemic and to discern the opportunities it created for Yieldstreet.
As a result, we ended 2020 with strength and momentum, with December marking the largest origination month of the year and biggest month ever for investment requests and new investors. That momentum has carried over into 2021 as we continue to notch additional record growth metrics.
What was the funding process like?
We experienced a lot of frenzied activity with SPACs now being so much more prevalent as a funding option in addition to considering a private capital raise. The process was very fast-paced given a lot of different options and interest in the marketplace.
What are the biggest challenges that you faced while raising capital?
A key challenge was determining which funding path to take given the many options. We had to figure out who to partner with and how much capital to raise. Plus, with all the activity in the market, we had to ensure that we were getting a lot of attention from prospective investors.
What factors about your business led your investors to write the check?
Broadly speaking, investors recognize the momentum we are experiencing and the fact that we are a market leader in a massive total addressable market. We believe the next decade will be the golden age of fintech. Fifty million consumers are expected to need this product in the next decade as they oversee trillions of dollars of wealth transfer to the next generation. They valued, within the alternative investment space, that no other platform offers this range and depth of investment options. Specifically, they were drawn to Yieldstreet’s strong unit economics (i.e. CAC and LTV), revenue and user growth.
Broadly speaking, investors recognize the momentum we are experiencing and the fact that we are a market leader in a massive total addressable market. We believe the next decade will be the golden age of fintech. Fifty million consumers are expected to need this product in the next decade as they oversee trillions of dollars of wealth transfer to the next generation. They valued, within the alternative investment space, that no other platform offers this range and depth of investment options. Specifically, they were drawn to Yieldstreet’s strong unit economics (i.e. CAC and LTV), revenue and user growth.
What are the milestones you plan to achieve in the next six months?
We’re planning to expand the user base and investment products as well as to build out the channel strategy. In addition, we expect to potentially pursue strategic acquisitions and to begin to establish an international footprint.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
While the answer largely depends on the stage of the company, in general, you should have product-market fit and revenue. If those are established, then focus on scaling and the capital should come to you.
Where do you see the company going now over the near term?
Near term, we are looking to grow our market presence and to expand the team. We’re aiming to reach more consumers and to continue building the Yieldstreet brand in the marketplace.
What’s your favorite outdoor dining restaurant in NYC?
Le Bilboquet.
