Rally Rd., a digital investment platform allowing users to purchase equity shares in collectible and luxury vehicles, raised $7 million in new funding to expand its offering of assets and launch brick-and-mortar locations.
Upfront Ventures led the round, bringing total funding to $10.1 million for the New York-based startup. The company’s post-money valuation is north of $25 million, CPO Rob Petrozzo said.
Rally Rd.’s mobile iOS application features a portfolio of more than 10 luxury cars, including a 1955 Porsche Speedster and 1985 Ferrari Testarossa. Borrowing from the investing practices of capital markets, Rally Rd. treats each car like its own public company, dividing each vehicle into shares at prices starting around $50 each. The platform currently boasts more than 50,000 iOS users and has seen 800% active user growth since December, which the company measures about bi-weekly.
After each car has been fully funded, it opens up for a day-long secondary trading period every 30 to 60 days. Shares of four of Rally Rd.’s vehicles have opened for trading to date, with each seeing gains so far. Rally Rd.’s latest trading day for its 1988 Lamborghini Jalpa launched Tuesday, with the vehicle’s value climbing 5.6% to $71.25 per share.
Rally Rd. is not yet profitable, but intends to operate its collection profitably eventually through sponsorships, monetized media around the assets, events and merchandise, Petrozzo said. A premium tier will also be added in the coming year to provide users with access to additional as-yet unannounced experiential components of the platform.
Some of the latest funding will be used to bring Rally Rd.’s assets from the screen to the showroom, Petrozzo said. Rally Rd. will open a brick-and-mortar location in New York’s SoHo by the end of the year, with similar spaces to follow in California and Florida. The physical locations will allow users to see their investments in person and learn more about alternative investing. The vehicles are currently kept in a temperature-controlled holding facility in Pennsylvania.
“The idea of investing for your future is still kind of abstract and an intimidating thing for a lot of people,” Petrozzo said. “We want to create a sort of an Apple store atmosphere where anyone can come in and learn a little bit, and add this tactile layer to the investment.”
Rally Rd. previously opened a pop-up in New York City last year, drawing the attention of Acorns investment app co-founder Jeff Cruttenden, who saw one of the cars through the window. While Cruttenden acknowledged that investing in an alternative asset like a car is “certainly not riskless,” he said he sees promise for Rally Rd. to capture younger users who may not know where to start with traditional investing.
“If investing in a collectible car gets someone who had never considered investing to look at investing, that’s a win – that’s powerful,” said Cruttenden, who invested in Rally Rd.’s latest funding round. Rally Rd.’s model may also appeal to investors who idealize luxury car ownership, or who want the option of diversifying their portfolios beyond traditional investments, he said.
Aside from continuing to grow its portfolio of vehicles, Rally Rd. plans to expand into other asset classes through 2019, adding sports collectibles, art and real estate to the platform, Petrozzo said. Each of the new offerings will also be securitized, with the assets divided into multiple equity shares to provide an “easy access point” to many investors, Petrozzo said.
Eli Broverman, co-founder of investment platform Betterment and another participant in Rally Rd.’s latest funding round, said he thinks the company may be on the cusp of a “new era of making all different sorts of investible assets accessible and liquid.”
“These things are tangible and have value to people that goes beyond just the returns,” Broverman said.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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