- Fintechs have already democratized stock trading for retail investors.
- VC investors poured $4.8 billion into the next frontier of alternative-investment startups in 2021.
- A handful of VCs and analysts shared their picks for alternative-investment fintechs to watch.
“Democratization” is a word you’ve likely heard in chatter about stock trading and crypto. And now the buzzword has moved to the alternative-asset marketplace as investors clamor for access to private markets.
Private equity, venture-capital funds, and real-estate investments come at steep prices that traditionally only institutional investors and individuals flush with cash could afford. But fintechs in the alternative-assets space have changed the game by bringing automated processes and fractional shares that remove middlemen and lower costs to less sophisticated investors.
This innovation comes at the right time: Everyday investors increasingly want access to alternative investments, which tend to be less correlated to an increasingly volatile stock market and have historically outperformed public markets.
In 2019, alt-investment stars were mostly real-estate fintechs like Fundrise and Cadre. Today, the definition has broadened to other markets, including investing in pre-IPO unicorn tech firms, private equity, and collectibles like fine art or baseball cards.
In the first half of 2022, alternative fintechs attracted $5.2 billion in total capital globally and are on track for more backing as the sector heats up, according to PitchBook. One of the biggest venture-capital raises among alt-investment fintechs went to Roofstock, a real-estate-investing startup that received $240 million in a Series E raise and a $1.9 billion valuation back in January.
Insider spoke with a handful of venture capitalists and analysts about the fintechs focused on alternative investments that they think are worth keeping an eye on.
Below are six early-stage alternative-investment fintechs on their radar.