A New York-based app on which users can trade against vintage cars, fancy wine and baseball cards just received a cash injection from a handful of investors, including Reddit’s co-founder Alexis Ohanion.
Launched in 2017, the Rally Rd. platform gives almost 200,000 users access to alternative asset investments in collectibles.
In Tuesday’s disclosure, the firm said it secured nearly $17 million in new funding. Other investors in this round include Upfront Ventures, billionaire Jim Pallotta’s Raptor Group, Porsche Ventures and Global Brain.
Rally’s assets under management have doubled since last fall to $15 million, according to the firm.
Trading on apps has become a booming business. Individual investors, including younger traders, have been using platforms such as Robinhood to take a much bigger role in the market. They have been buying up technology companies including Tesla Inc. and Apple Inc.
The added investment could position Rally to capitalize on the newly reinvigorated American obsession with trading. For years, there has been easy access to stocks for most investors but alternative assets, such as real estate or private equity, have been harder to trade. Rare items, like expensive art, are even more difficult.
Unique asset classes are increasing in value, said Mr. Ohanion.
Mr. Ohanian is active in the venture community, recently leaving the early-stage venture fund Initialized Capital that he co-founded and raising $150 million for a new venture fund called 776, according to a document filed to the Securities and Exchange Commission last week.
Users of Rally are able to trade vintage items for as little as $1 a share. After an “initial public offering” is set for an item, users wait 90 days and then have one day to trade their shares or buy more before the next 90-day waiting period. Users can also buy items off the platform outright, which would then distribute money to the investors.
“Returns from some of these collectibles are very real returns for some of these folks,” Mr. Ohanian said. “We are at this point where I check my bank account on my phone, why shouldn’t I be able to check my alternative assets?”
Mr. Ohanion had been looking at the alternative-assets market for a while, and said he initially saw the investment potential of Rally when he bought his father a 1966 Mustang. The cost of upkeep was more than he imagined. He said Rally gives users the satisfaction of owning something without the hassle of maintaining the item.
There are risks for investors trading less liquid assets.
Unlike stocks, which trade every second on platforms with millions of investors, trading venues such as Rally don’t have nearly the same amount of users, and there is no guarantee that traders who want their money can liquidate shares quickly.
An investment based on a physical item also is only as good as the safety of that item.
For instance, alternative-Investment platform YieldStreet Inc. is under investigation by federal agencies after a dozen ships used as collateral for loans disappeared in international waters, leaving investors without expected payments.
At the same time, trading platforms such as Rally, Robinhood and WeBull are introducing a wave of new investors to different markets.
Most of Rally’s users are first-time investors in alternative assets, said Rob Petrozzo, co-founder and chief product officer, and they often return after investing in assets that they recognize.
The average return for Rally members invested in assets that were bought off the platform in the past year was 32%, said Mr. Petrozzo.
Los Angeles park ranger Michael Whitham likes to use the platform to invest in baseball memorabilia. He started with a $150 investment in a Willie Mays game-worn jersey, then a $500 investment in a Honus Wagner card and made an investment in a bat owned by Babe Ruth.
Mr. Whitham, 35 years old, said his investments have increased 40% over a 90-day period.
“I think this is a rare opportunity for regular people to invest like rich people do,” Mr. Whitham said.