Yieldstreet raises $100M as alternative investments heat up

Michael Weisz, Yieldstreet Co-Founder & President joins the Yahoo Finance Live panel to discuss their latest funding round.

Video Transcript

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- Welcome back to "Yahoo Finance Live." We've been talking a lot about stocks, but as of late, you can look at the surge in prices in other areas. Alternative investments also catching a bid here, and you don't need to look much farther than collectibles. We've talked a lot about that, NFTs, of course. But what about some more traditional alternative investments, including the likes of real estate, even marine financing available on a platform Yieldstreet.

It's been around since 2015 and just a recently closed a $100 million Series C funding round, which helps to grow out the platform's ability to connect investors to some more interesting projects. And joining us right now is Yieldstreet's co-founder and president Michael Weisz for more on that. Michael, congratulations on the funding round. I mean, talk to me about how much that will help in your guys' endeavor to pair, and I should point this out. Most of the time, accredited investors here to access some of these. How does it all work?

MICHAEL WEISZ: Thank you. Thank you so much, Zach, and thank you for having me. So let's see. Yieldstreet is an online investment platform that's finally giving people access to alternative investments that historically they would never be able to get, right?

And so the way we think about it is that people need to be able to get on a road to financial independence or to further their financial independence. We want to deliver that by helping them build a portfolio that's combined of income, so consistent passive income, and asset growth. And the way we think about doing that is finally fractionalizing traditional alternative investments that were historically reserved for the biggest institutions or some of the wealthiest people in America and beyond.

- So what kind of asset classes are we talking about specifically, and what kind of growth have you seen? I mean, we talk so much about the new money that's been coming into the market with so many people really more and more vested in some type of investment. What have you seen?

MICHAEL WEISZ: So we're seeing-- there's a lot of things happening in our market, right? So number one, if you think about alternative investments in retail participation, historically, it's been on average about 6% participation from the retail wallet where you're going to see endowments and foundations even as much as 60%. So you're seeing institutional investment in alt almost 10x the retail portfolio.

Now retail is super interesting today because the 60-40 model is dead. Bond yields are in the ground. How are you going to generate passive income? How are you going to have asset growth? You need a better solution.

You need to modernize your portfolio, and we want to be the household name that delivers that solution to you. The asset classes vary because the key is building a platform where you can have curated investment opportunities, you can get educated, you can learn about them, you can make the right decisions for yourself, and you can build a diversified portfolio. And that's really what we do at Yieldstreet.

So we have commercial real estate investments, single family rentals, which, as you know, has been huge over the past year during the pandemic. You're going to see opportunities in private credit. You're going to see equipment financing, and art financing, and marine, in legal/finance, and then, of course, we recently launched structured notes, which is a $3 trillion market that hasn't really had the right interface, the right user experience for retail. And as well, on top of that, we started to invest alongside some major funds, private equity and private credit funds, giving people exposure, through Yieldstreet, to some great managers around so really helping you build a diversified portfolio in yield, duration, asset class, geography, and more.

- And, Michael, I mean, one of maybe the criticisms here might be that it sounds great, and maybe it has access to some new things that people won't be able to get. But at the same time, those wealthier clients would have always had that access, so there'd be some questions about the strength of some of these opportunities. And to hit back at some of those criticisms, I mean, talk to me about what you see on the platform because there was one-- I believe, a class action lawsuit in regards to maybe the default rates tied to some of these things offered on Yieldstreet. They claimed that the default rate was five times higher than junk bonds. I mean, what do you see on the platform for the health and maybe the returns for some of these that you can point to debunk some of those criticisms?

MICHAEL WEISZ: That's a great question. So I think-- let's start from the top. So we've been around, like you said, since 2015. In that time, more than $1.9 billion has been invested on Yieldstreet. From there, we have returned $910 million of principal and interest since inception across 150 investments that have fully matured and repaid.

We have over 300,000 members, and in the last year, we have seen over 200% growth. So specifically, the new investors and number of investment requests are both up more than 250% in the first five months of this year relative to the five months in the prior year. Now to your point about defaults and other issues, I'll be the first one to tell you and I'm proud to say that Yieldstreet is always talking about what the risks are in investing.

We are building Yieldstreet for the consumer. We're an investment-first platform, and so the notion of understanding the journey in the alternative investments is key and is important to us. But overall, we believe that consistent investments in diversification and investment opportunities with lower correlation than you would see in broader markets is going to drive a better return on your portfolio.

- Yeah, it's an interesting option out there now to drive as you're talking about some of that diversification there too, a tool to be used there. Yieldstreet co-founder, though, I appreciate you coming on here. Yieldstreet co-founder and president Michael Weisz, congrats, again, on that $100 million fundraising round.