Updated: Dec 6, 2021
Earlier in the month of January frustrations with Wall Street were running high. It is a well-known fact that the wealthiest 1% of Americans now hold more than 50% of all household equities. During the pandemic, while Wall Street had gotten richer, the same was not true for everyone else.
Zero commission trading on Robinhood and other online brokerages have made it easier for investors to access the stock market. Nearly 25% of stock trading was attributed to retail investors in 2020. That’s up from about 10% only a decade ago. And what started as a way to share stock tips turned into a revolution. This retail rush reached a crescendo this year with Reddit chatroom Wall Street Bets drawing attention to highly shorted stocks like GameStop and AMC. Trading on options reached historic levels and these stocks soared dramatically. This frenzy caught many of Wall Street’s biggest investors off guard and these surges caused losses of billions of dollars to hedge funds that had bet against the retail investors.
With the rise of the retail investor there’s also been enormous interest on the investor side to expand their portfolio and get more diversification. Recently, a trading card featuring the quarterback Tom Brady sold for a record $1.3 million. The total value of the cryptocurrency Bitcoin hit $1 trillion. And Christie’s sold a digital artwork by an artist known as Beeple for $69.3 million after bids started at just $100.
Today, alternatives are an $11T market with expected growth to surpass $17T by 2025. In conjunction, portfolio wallet share for alternatives currently sits at around 7% and is expected to grow up to 15%. Over the past decade, technology has revolutionized the way investors discover, access and deploy capital into investments. Particularly in the alternatives space, many new platforms have come online allowing investors to access alternative assets like venture capital, commercial real estate, crypto, collectibles, and more.
While the likes of Robinhood have revolutionised equity investing in the public markets, Republic a New York based multi asset marketplace has been democratizing access to private markets. Republic curates private investing opportunities with high-growth potential across start-ups, gaming, real estate, and crypto for retail investors using essentially a crowd funding platform. Founded in 2016, Republic has already transacted with over 1 million non-accredited, high net worth and institutional investors across 110 markets. More than $300 million has been raised through this platform. Private investing has largely been inaccessible to retail investors, however on Republic they can participate in highly vetted deals with minimum investments ranging from just $50-100 (would highly recommend people new to angel investing to check this out). In January and February of 2021, Republic’s ecosystem facilitated 48 deals that raised $17.45 million. Recent Crowdfunding updates to the JOBS Act now allow companies to now raise up to $5 million from investors, up from the current $1.07 million cap. This will further propel deals, not only early stage, but later stages as well. Venture capital can no longer be defined by images of cigars, yachts, and expensive suits. Now anyone can be an investor.
Last month Republic raised its Series A and I'm delighted that I could participate in this round and add this exciting fintech company to my portfolio of investments. This $36 million Series A financing round from strategic investors was led by Galaxy Interactive, with participation by Tribe Capital, Motley Fool Ventures and Broadhaven Ventures. Kendrick Nguyen, the CEO of Republic says that "when consumers become investors in private companies (especially consumer-focused companies), they create affinity for the private company’s products and become ambassadors for these brands." Galaxy Interactive’s Richard Kim believes that we are “at the early stages of a multi-decade super-cycle of retail empowerment.” Michael Sidgmore of Broadhaven thinks that Republic is the on-ramp for investors into private markets, the “Charles Schwab for the next century.”
Not only Robinhood and Republic, but a host of other winner investment brands including Coinbase, Cash App, Revolut, Binance etc. are shaping this revolution. So, are the proletarians finally rising up to change the order structure in finance? I think so.