This week we’ve got a very special issue for you all: A deep dive into Collectable — a new investment platform dedicated to iconic sports memorabilia.
This issue includes an interview with Collectable’s CEO, Ezra Levine, and also marks the launch of the new Alternative Assets Podcast 🎧
Let’s dive in!
What is Collectable?
Collectable is a new investing platform and community for buying & trading shares in sports collectibles — including cards, jerseys, and other highly valuable and culturally significant sports memorabilia.
The way it works is pretty simple:
- Collectable sources, validates, and insures valuable items from dealers, auctions, and private collections.
- They then create a separate LLC for each item, allowing buyers to purchase shares in the same way you’d buy a share of Apple stock.
- Investors can earn money as their shares become more valuable over time, and can sell them later on the secondary market.
While readers of this blog may be quite familiar with fractional ownership platforms, including those for fractional investing in farmland, wine, and websites, Collectable has an interesting history, and was actually the first platform to introduce the concept of seller retained ownership, which we’ll get into later.
Collectable launched in 2014 as a sports auction data company. They were essentially the #1 aggregator of historical pricing data for sports memorabilia auctions. But this past September, after many months of preparation, they pivoted to become the fractional ownership platform they are today.
And boy did they came out swinging. ⚾ Their very first item was a 1953 Topps Mickey Mantle card in mint condition, which at $2.5 million was (and still is) the highest valued sports collectible to ever be fractionalized!
Since then, they’ve featured a bunch of unique and special items, including Muhammad Ali’s original “Rumble in the Jungle” Championship Belt, Jackie Robinson’s signed bat, and most recently, Kareem Abdul-Jabbar’s 1968 UCLA Championship Jacket, through their new partnership with Sports Immortals.
Now, with interest & money in the space skyrocketing, Collectable has been reborn as new platform and community dedicated entirely to sports memorabilia.
In this issue I’ll look at the history of how they got to this point, analyze the current state of the app, and pontificate a bit on their promising future.
🎙️ Interview with Ezra Levine
This week Stefan sat down with Michael Wenner, VP of Marketing at Masterworks; the world’s largest (and arguably only) platform dedicated to buying fractional shares of high-quality contemporary artwork.
In the chat, Stefan and Michael discuss:
Artwork as the oldest “newest” asset class
How Masterworks digitized decades of sales data; including activity, research, and other data points
How Masterworks has published their database for anyone to see, and parallels with what Case-Schiller did for real estate
Why effectively 0% of institutional capital is directed toward art — and why that will change
What attributes Masterworks looks for when buying artwork (cultural significance + momentum)
Living artists vs dead artists: Why living artists have a greater appreciation rate, but also a higher risk/loss rate
Why selling artwork to a museum is the ultimate exit.
The future of fractionalized artwork investing; including thoughts on the NFT artwork (spoiler: he thinks it’s a fad)
Follow Alternative Assets
– Website & newsletter: https://alternativeassets.club
– Twitter: https://twitter.com/altassetsclub
I recently had the pleasure of sitting down with Ezra Levine, Collectable’s CEO, for a 45-minute podcast.
In the podcast we discuss:
- Collectable’s history as a sports auction data aggregator
- Navigating the legal issues in order to get where they are today
- Emmitt Smith as their first athlete ambassador
- How Collectable introduced the concept of retained ownership
- Collectable’s new secondary market
- The advisory committee and shareholder protection
- How they source their items through existing relationships
- The new partnership with Sports Immortals
- Creating a sports investor community
- Collectable’s long term plans
You can listen to the podcast through Substack’s player above, or wherever you listen to podcasts. (Oh, except iTunes. It’s not there yet. Long story.) You can also read our full interview on the website.
Introducing retained ownership
One of the most interesting revelations from our chat was the fact that Ezra and Collectable actually introduced the concept of retained ownership to the industry.
Similar to Rally Road, Collectable works directly with dealers, sellers, and auction houses to manage the fractionalization and sale of the asset.
But unlike Rally who actually purchases each asset, Collectable does not buy each asset outright.
This is a big deal. It means that, say, an athlete can retain a majority equity stake in their own offerings. So as the value continues to go up after the IPO, the athlete also stands to financially benefit.
This should allow Collectable to source extremely valuable items from athletes who may not want to fully part with their past, but still want the ability to cash in on it. They’ve found owners are more willing to consign a portion of their asset than they are to sell outright, because they still retain upside.
Since they don’t have to spend money to buy the assets themselves, this model also means deployment of capital is far more efficient (and less risky!) Instead, Collectable can focus on garnering a best-in-class class supply, hiring more team members, and introducing new operational efficiencies, without having what ultimately amounts to an enormous liability on their balance sheet.
While the concept of retained ownership has existed in public financial markets for a long time, it didn’t really exist for any alternative investments before Collectable. And to this day, no other collectible fractional investing company offers this concept of retained ownership.
The secondary market and buyout offers
A few weeks ago, Collectable launched their secondary market, which allows investors to sell shares they’ve purchased to both new and existing investors after a 90-day lockup period. To make this happen they partnered with Templum Markets, a technology platform for capital raising and secondary trading. This is the primary way investors realize a gain on an investment.
But the other way is rather interesting — it’s through a full buyout offer for the entire item. Occasionally a high-profile buyer will see a listing on the platform and make an offer to buy it outright.
When this happens, the buyer is vetted, an offer is formally made, and existing investors are able to vote on the decision (each investor gets a proportional vote based on how many shares they have purchased.)
If >50% of investors want to sell at the offer price, it’s passed up to a 5-person advisory committee, who has the final say. The advisory committee exists as an added layer of protection; preventing shitty deals, fraud, or investor collusion. Once they sign off on the deal, all revenues get paid out and proportionally split among investors.
For example: Just one month after the IPO of a recently listed Patrick Mahomes rookie card, Collectable investors received a full buyout offer for 35% above the initial share price. 68% of investors voted to sell, so the deal was then was passed to the advisory committee.
After considering shareholder sentiment and recent comps, the advisory committee voted to sell, 3-2. The offer was accepted and proportional profits were paid out to investors. Not bad!
But while buyout offers introduce some flexibility, they also introduce some risk. If the investors collectively vote to sell at a lower price per share than what you paid, you could certainly lose money, or perhaps owe money in taxes well before you’re ready.
Still, the benefit of the secondary market is the full transparency it provides. Ultimately, the market is doing its job regardless of whether a buyout offer is accepted. Take the Mahomes card for example. Even if the buyout offer wasn’t accepted, the asset should eventually trade close to the offer price, because the clear interest of the buyout offer implies that’s what the market effectively thinks it’s worth.
Partnership with Sports Immortals
Collectable recently announced a partnership with Sports Immortals. If you haven’t spent time in the sports collectibles space, you probably haven’t heard of them. But they have a massive, museum-worthy collection of sports memorabilia.
In fact, with over one million artifacts, they’re considered to hold the largest and most diverse collection of sports memorabilia in the entire world. Think uniforms, equipment, autographs galore, photos, tickets, and awards.
The exclusive 5-year deal entitles Collectable to millions of dollars worth of consignments each year. Collectable’s curators and appraisers help decide which items should be sold, and negotiate proper IPO prices for each one. We can expect to see many rare, unique, valuable assets coming online over the next half-decade.
Creating a sports investor community
Collectable is starting to experiment with shareholder access events, where investors would get to interact directly with the athlete.
This can take many shapes and forms: From joining a Zoom call with the athlete, to bonus items like signed helmets, to dinners and meet & greets (when Covid ends), to perhaps some Cameo-like shoutouts until then. The goal is to not just become a platform for trading shares in sports collectibles, but to actually provide some level of physical engagement with athletes.
I think this is a fantastic idea; one which makes the experience tangible and will really help set Collectable apart from other platforms. It kicks the emotion, personalization, and loyalty up a notch, and creates something that is greater than the sum of its parts. You didn’t just buy 12 shares of Emmitt Smith’s jersey, you joked around with him on a Zoom call.
To a fan, that level of direct interaction is priceless.
A teardown of Collectable’s app
As many of you know I’m a product guy. There’s few things I love more than analyzing a product’s user experience, and judging the heck out of it. (Don’t lie, you love it too.)
I’m a big fan of the user onboarding teardowns that Samuel Hulick does, and figured it’d be fun to do one for Collectable.
Website and app download
The collectable.com website gets to the point quickly, with a compelling headline & imagery:
Own Shares of Iconic Sports Cards & Memorabilia
They push their app hard, with two buttons above the fold. This surprised me about Rally as well. Unlike Vinovest or FarmTogether, which have web-based platforms but no apps, Collectable is extremely app-centric.
However, after clicking the button to download the app, I was taken to this screen asking for my phone number, which aesthetically speaking was quite a changeup from the previous screen.
Why do I have to enter my phone number to download the app? And does it have to be a US number? Is Collectable US only? Some context here would be nice…
After digging up my old US phone, I entered the number and downloaded the app.
At first glance, the logo looks familiar… Maybe I’ve seen it before with Comedy Central? Or was it Campus? Or perhaps ClearChannel? Canopy? Or maybe it was Curio? No no wait, was it compose.ai? Or what about Pocket Casts?
You get the point. 😂
Onboarding and account setup
Logo griping aside, onboarding was mostly a pleasant breeze. Instead of front-loading the legal stuff and adding friction right off the bat, Collectable once again gets right to the point, and makes it clear the app is about you. What are you interested in? What do you want to see?
There’s plenty of time for the legal stuff later. Let me explore the app first.
Onboarding continued with a nice overview of how everything works. Headlines are tight and they don’t waste words.
However, at the conclusion of onboarding I was shocked to get spit out into a screen with a big fat message: “Nothing to see here.” I’m not sure if it was a temporary glitch or what, but it was pretty jarring. Even if there aren’t any featured items at the time, there’s gotta be something better you can show me than a message saying, “WE’RE CLOSED, GO AWAY.”
I actually closed the app at that point with the intention of checking back later. But other folks might not be as patient.
Browsing through the app
I returned to the app later to find a beautiful Muhammad Ali Championship Belt staring me in the face.
Now we’re talking!
Browsing through the app is smooth, clean, and well, just plain fun! Crisp, rich images and multi-directional swiping give you the feeling that you’re inside a digital museum.
Each asset has a history, and Collectable does a great job letting you know all about it. For me, this is one of the most aspects of the experience. Learning and seeing the backstory truly brings each asset to life. It makes the experience real.
You can even download the original photomatching document, and read through the full 200+ page legal doc for each offering (no thanks, but glad to know it’s there!)
Buying an asset
A few days later I got an in-app notification about an upcoming auction I was interested in: a signed Jackie Robinson bat. I set my alarm for 4:50am so I could log in for the IPO. (Man, these auctions are not conducive to Australian time!)
Trading moved quickly. Seeing the blue bar move in real-time was both exhilarating and nerve-wracking. How can I buy shares yet? I’ve barely set up my account!
Ahh, here’s the long-awaited legal stuff.
…Oh man, you’re asking me for this now? The IPO is happening! How long is this going to take? Am I going to be able to participate?
And where’s my state? For that matter, where’s my country? I don’t live in Americ-
Ah, so that’s why they had me enter my phone number earlier. Collectable is US only!
This is fine, I’m still an American citizen with a Social Security number, but still — what if I wasn’t? Remember, during this whole process they never actually told me the app was US only.
Luckily, as you can see from the time on my phone, I was able to complete the SS# and accreditation steps in just a few minutes.
Phew! Okay, now onto the purchase…
I was a bit worried that I’d have to fund my account, which typically takes days, not minutes. But my fears were quickly assuaged when I saw they accept credit cards (!) which was a very pleasant surprise.
I’m a bit miffed they didn’t prompt me to take these steps earlier. I’m usually a fan of pushing friction as far downstream as possible, but as we’ve seen, these assets move fast. They had plenty of opportunity to prompt me after initial signup, and could have saved my mini-anxiety attack in the middle of the night as I scrambled to get legal just in the nick of time!
But at the end of the day I can’t complain. 15 minutes from app open to app close, and I am now the proud (partial) owner of a bat signed by Jackie Robinson.
He probably won’t be around for any of the Zoom chats, but still — I’m a happy camper. 😃
Collectable is the first and only fractional investment platform dedicated entirely to sports memorabilia. They have an experienced team, deep industry connections, and their app is pretty tight.
I think their capital-light business model and dedication to community give these guys a bright, sustainable future. And I look forward to seeing what cool and iconic memorabilia they bring to the masses.
Game on. 🥊
How’d you like this issue?