SoHo Startup Gets Boost to Sell Shares in Pricey Collectibles

By: Benyamin Davidsons

Rally, a SoHo-based startup, allows investors to buy small shares of ownership in collectibles, including classic cars, rare wristwatches, and even dinosaur bones. As per Crain’s NY, the company is part of a growing technology-enabled industry which is offering investment opportunities outside the stock market to a class of mostly young and less experienced investors. “There are so many interesting assets, collectibles, that people want to interact with, but they can’t,” said Rally’s CEO, George Leimer, a former Disney and eBay executive, who joined the four-year-old startup in the fall. Most people don’t have the money to invest in the luxury market. By offering low-cost fractional ownership of aged bottles of wine or $180,000 sneakers, Rally is making high-end collectibles accessible to the masses, Leimer said.

As reported by Crain’s, last month the startup raised a $30 million venture capital investment round to help develop its core of roughly 250,000 investors. Rally has roughly 300 items up for trading, worth a total of about $30 million. The firm buys items at auction, then registers them with the U.S. Securities and Exchange Commission in order to sell shares in the collectibles. The company makes its revenue off charging a sourcing fee of around 7% on each item’s acquisition cost, which is included in the pricing of the IPO. Buyers don’t actually acquire access to the item in which they purchase shares. The access is theoretical, and the purchased assets usually have sentimental value for the investors. It is a particularly risky investment, as the shares for items purchased don’t actually generate any revenue, making the value essentially subjective. There are at least four other marketplaces competing with Rally in offering a slice of a collectable asset.

In a few weeks, Rally is reopening a showroom in SoHo, which it launched in 2019 but was shut due to the pandemic. In May, the company also secured a $50 million debt with which to purchase more collectibles, in addition to its venture capital funding. “There are very few limitations on the types of things that Rally can offer,” Leimer said. “If it is something people are passionate about but haven’t had access to, then it belongs on Rally.”

The average age of investors on Rally is 28, according to Leimer. The pandemic stay-at-home orders and the stimulus check payouts, led to a spike in active interest in investments overall, and in collectables —particularly in younger adults, said Nick Colas, co-founder of DataTrek Research. “The question is whether it stays that way as the world opens up,” Colas said.