Rally Raises $30 Million From Accel & Others

Friends,

In February, The Chernin Group and an impressive list of celebrity investors like Mark Cuban, Kevin Durant, Mark Whalberg, and others invested $40 million in Goldin Auctions — the leading sports collectibles marketplace.

With the business on pace to do more than $200 million in sales this year — 2x the record $100M year they saw in 2020 — the demand has been insane.

Even more interesting, it isn’t slowing down.

Rally, the fractional share platform that allows retail investors to own small pieces of expensive collectible assets like sports trading cards, art, shoes, watches, and more, has announced a $30 million Series B funding round this morning.

Here are the details:

• $30 million Series B round

• Led by Accel, with participation from existing investors Upfront Ventures, Social Leverage, and others.

• Rally has also secured a $50M debt facility from Upper90 Capital, which will allow the company to efficiently offer one-of-a-kind assets across all categories.

• Rally will use the new funding to scale user acquisition, hire new employees, and open up additional retail locations in up to 10 cities across the country.

Here’s what Accel’s Ryan Sweeney said about the investment:

The bottom line?

The market for sports collectibles as an alternative asset class has been on fire.

When it comes to collectibles as an alternative asset class, we’ve seen a perfect storm occur over the last 12 months — resulting in record adoption globally.

Governments worldwide have combined to print more than $20 trillion in economic stimulus during the COVID-19 pandemic, causing investors to search for inflation-hedged assets.

Older investors picked gold & real estate, while younger investors turned to bitcoin & sports collectibles. Not to mention the inherent nostalgia of collectors in their 30s and 40s circling back to the hobby they loved as children.

That all plays an important role monetarily, but more importantly, the community aspect of “the hobby” has never been stronger.

Investment platforms like Rally, Collectable, Otis, and others democratize access to expensive collectibles by “IPOing” these assets for as low as $1 per share. But in simpler terms, they have really just utilized an intelligent stack of technology to build, widen, and strengthen the existing community within collectibles.

Don’t forget; these items are naturally built on an individual's emotional attachment in the first place. For Rally, that’s expanded their business model.

After originally being focused on fractional ownership of classic automobiles when they launched in late 2016, Rally now has 15 individual categories. That’s up from 5 just a year ago and now includes assets within Space, Collectible Technology, Political Memorabilia, and even Dinosaurs.

Here are a couple of examples:

1. Rally will soon IPO one of the first copies of the Declaration of Independence. The total offering will be valued at $2 million, with investors able to participate for as low as $25 per share.

2. Rally is also IPOing a pair of game-worn Kobe Bryant sneakers, which he gifted to a 17-year-old Lebron James, who then wore them for a game as well (even though they were a size too small).

I could go on, but you get the point — they are super cool & unique assets that have historically been good investments.

Furthermore, here are a few impressive stats that Rally shared with me:

• Q1 2021 saw more new investors than all of 2020

• Q1 2021 trading volume is up 450% compared to Q1 2020

• Q1 2021 saw a 575% increase in new investors compared to Q1 2020

• They are approaching $30M in assets under management, with 300+ assets listed

• There are more than 200,000 users on the platform trading alternative assets, and the average age is 28 years old.

As Rally and its competitors continue to attract investors, raise capital, hire new staff, and innovate their technology offering, I expect the total addressable market to expand over time.

Educational resources will be key, but the community aspect is more important.

The winners of tomorrow will use product innovation as a driving force to reduce friction, scale offerings, and compound the existing emotional attachment & community that the hobby offers.

In the end, it will be fun to see what Rally can accomplish with an additional $30 million in funding.

Have a great day. We’ll talk tomorrow.

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