Reddit Cofounder Alexis Ohanian’s New Fintech Bet Will Trade Sports Cards Like Stocks
Every sports card enthusiast has a crown jewel in their collection. For Leore Avidar, the founder and CEO of a new card trading platform called Alt, it’s a one of a kind 2008 Topps Chrome Kobe Bryant Superfractor. Alexis Ohanian, Reddit cofounder turned founder of venture capital firm Seven Seven Six, who also sits on Alt’s board, says his “modern favorite” is a rookie card of his tennis champion wife Serena Williams, one of only ten produced.
Alt, which launched today backed by $31 million in combined seed and Series A funding, hopes to attract card collectors to its new investing platform. Ohanian’s Seven Seven Six led the Series A in February, joining other investors like Kevin Durant’s Thirty Five Ventures, Larry Fitzgerald, Stripe cofounders Patrick and John Collison, First Round Capital, Addition Ventures, SV Angel and BoxGroup (which led the pre-seed). With San Francisco-based Alt, Avidar is also a double CEO—he is the founder and chief of direct mail startup Lob, which announced a $50 million Series C two weeks ago.
More than just a hobby, sports cards and memorabilia collecting can sometimes be a profitable investment—the fast growing market is worth upwards of $10 billion, according to Ken Goldin, founder and CEO of New Jersey-based sports auction house Goldin Auctions. A lifelong basketball fan, Alt’s Avidar began buying and selling cards in 2016 as a side hustle, and he says his favorite cards are probably now worth seven figures (“But I would never sell them.”). Like many card traders, Avidar mainly used eBay, where he says he sometimes grappled with fraud and selling fees close to 12.5%. So in the early months of the pandemic, he set out to build a better marketplace.
Alt’s solution is simple: “Basically all it is a platform where you can invest in sports cards, as easily as investing in any stocks,” says Avidar. Banking on the market becoming increasingly liquid, transaction fees are set at 1.5%. To mitigate fraud, all cards on the Alt marketplace are pre-authenticated and placed in a secure, temperature-controlled “Alt Vault”—which are actually plural, and run in partnership with an unnamed U.S. vault company. And to fairly value the assets, Alt built a pricing model that takes into account historical valuations and comparables. About 1,000 people joined Alt’s closed beta test prior to the official unveiling Thursday, with nearly 5,000 more on the waitlist.
Alexis Ohanian, who launched his latest venture capital firm Seven Seven Six in September with a $150 million fund, likens Alt’s potential to that of a nascent Coinbase, where he made an early bet in 2012. At the time, Ohanian says that the brightest minds investing in Bitcoin were managing portfolios with spreadsheets—until Coinbase stepped in to create a better platform to buy, sell and oversee these cryptocurrency holdings. (The company is currently preparing to go public at a reported $100 billion valuation.)
Having used spreadsheets to manage his personal card collection, Ohanian remarks that Alt is sitting on a similar goldmine for collectibles. “I could not unsee the experience I had investing in Coinbase combined with my own, let’s say, irrational excitement around the asset class of trading cards,” Ohanian says. “I was definitely a hobbyist as a kid, whereas Bitcoin was not a thing I could have collected when I was younger. So it felt a lot more innate to get excited about this.”
Alt’s emergence reflects a wider democratization of investing in all types of asset classes, says Merritt Hummer, a fintech-focused partner at Bain Capital Ventures. “In the future, anything that has value will be securitized, fractionalized and tradeable on an exchange,” Hummer writes in an email. “Investing passively in a plot of farm land will be as easy as buying a share of stock.”
Several other startups exist for investing in collectibles, but most break expensive assets down into more palatable shares. Rally Rd. is a high-profile player that lets investors buy and sell chunks of collectibles ranging from Lamborghinis to Birkin handbags (and sports cards, too), raising $27 million since 2017. Otis, with about $14 million in funding since 2019, aims to become the “Nasdaq for culture,” according to CEO and founder Michael Karnjanaprakorn. With about 75,000 customers, Otis sells shares of trading cards, sneakers, comics and even a $75,000 work of art made out of medical bills. Startups like StarStock, which in December closed a $1.3 million seed round backed by Kevin Durant, and Whatnot, which hosts frequent trading livestreams, and just raised a $20 million Series A, have marketplaces that loosely resemble Alt.
The recent popularity of non-fungible tokens (NFTs) using blockchain technology in the sports arena raises questions about the long-term viability of something as mundane and old-fashioned as trading sports cards derived from dead trees. Launched five months ago, N(BA)’s Top Shot business booked nearly $300 million in sales over the past 30 days, according to crypto tracker CryptoSlam. Each Top Shot “Moment” is essentially a virtual trading card, but technically it is a video clip from a sliver of N(BA) history that gleans its authenticity and scarcity from its NFT. A Lebron James Moment recently sold for more than $200,000.
To Hummer, NFTs represent “pure substitutes” for physical collectibles. Avidar is steadfast in his belief that the digital and physical collectibles markets overlap minimally, and he says he has no plans to incorporate NFTs into Alt anytime soon. Ohanian is betting that fond childhood memories will blow wind into Alt’s sails for the time being.
“For Gen Z digital natives, NFTs as a medium make so much sense because they don’t have nostalgia…But in the meantime, financial wealth is largely concentrated among the older folks who have a nostalgia factor,” he says.
Justin Birnbaum contributed reporting to this article.