More than 3k VC-backed startups have incinerated $27 billion

Hello and welcome to Alts Cafe

This is a quick-fire look at what’s driving your alts week.

What’s on deck today:

  • Jobs came in hot
  • Real estate keeps getting worse [except these two weird industries]
  • More than 3k VC-backed startups, which collectively raised over $27 billion, have failed this year
  • Crypto keeps ripping
  • Congress is coming after PE [your reminder elections are coming soon]

Macro View

Bullish News

  • The jobs growth rate in the US came in ​higher​ than expected, and unemployment was lower than expected. The vast majority of ​gains​ came in the healthcare and government sectors.
    • But a rate cut just got a lot ​less​ likely.
  • The lobbying group that claimed ​$45 billion worth of theft​ at American retailers made the number up.

Bearish News

What are the odds?

Get $25 to play around with invest on Kalshi using this link.

End of Year

S&P 500

4,602

​Nasdaq​

16,083

Imminent Numbers

​November Annual Inflation​

3.37%

​December Fed Rate Hike​

1% chance

December & Beyond

​December Non-Farm Payroll​

175,846

​December Unemployment​

3.86%

​Q4 GDP Growth​

1.76%

Rate cut by July

74%

The markets aren’t expecting any surprises in December.

What are we doing?

​ALTS 1​ Fund news:

We’re drawing up the paperwork for our art acquisition.

Real Estate

Bullish News

  • Saudi real estate reservations more than ​doubled​ year over year.
  • Mortgage rates have come ​down​ a bit.
  • Over the last year, industrial and tourism CRE have both managed ​top​ 5% returns.
  • ​NARRATIVE VIOLATION:​ The average California homeowner gained $51k home equity in 2023 while Texans lost over $8k.

Bearish News

  • Multifamily is the ​next​ domino to fall in CRE.
  • Proptech startup Veev, which mastered modular homes, is about to go ​bust​.
  • Median income earners ​spent​ 41% of their pay on housing this year, up from 21% in 2012. It’s 80% in Anaheim and San Francisco.
  • CMBS distressed loans ​topped​ $2 billion, with offices comprising nearly 3/4 of that.
  • Pending home sales are ​down​ 1.5% MoM to the lowest level ever.
  • Redfin ​predicts​ home prices will fall 1% in 2024.
    • But listings will pick up.
    • And mortgage rates will remain above 6%. Fannie Mae thinks rates will ​reach​ 6.9% at the end of 2025.
  • A San Francisco home purchased for $20 million three years ago just ​sold for half that​.
  • A private island for sale in Florida just got a ​$30 million price cut​.

How to invest in real estate right now:

Don’t

Startups

Bullish News

  • Softbank is ​buying​ a 51% stake in Irish startup Cubic Telecom for $514 million.
  • Americans ​bought​ over one million electric vehicles in 2023.
  • MIT has spun off a new ​startup​ called Liquid AI that aims to build general-purpose AI systems powered by a new type of AI called a liquid neural network.
  • Robinhood and Coinbase’s ​split​ is good for challenger Fintechs.
  • Smaller VCs consistently ​outperform​ their larger counterparts.
  • ​European startups​ are doing just fine, thank you.

Bearish News

  • At least 3,200 venture-backed companies have gone ​bankrupt​ this year. They raised a cumulative $27.2 billion.
    • And Carta says 87 of the firms on its platform that raised at least $10 million had shut down this year as of October — double the amount for all of 2022.

How to invest in startups right now:

Go with an emerging VC manager.

Private Equity and Private Credit

Bullish News

  • ​RRJ Capital​, the private equity firm founded by former Goldman Sachs banker Richard Ong, is seeking to ​raise​ as much as $2 billion for a new fund that focuses on private credit in Asia.
  • Led by alternative-asset behemoths like Apollo Global Management and Blackstone, ​private​ credit has arguably become the most powerful transformational force in the financial world since the 2008 economic crisis.

Bearish News

How to invest in PE and Private Credit right now:

I feel a credit bubble

Crypto & NFTs

Here’s what you need to know:

[Note: because I’m travelling Sunday to Tuesday, I’m writing this Saturday. Prices will be a couple days out of date. I hope nothing important happens.]

Crypto continues to rip…to.

Sentiment is actually down slightly on last week.

Outstanding seven days for NFTs as they outpaced ETH.

Bullish News

  • A federal judge ​accepted​ Binance founder Changpeng “CZ” Zhao’s guilty plea to one count of violating the Bank Secrecy Act.
  • Binance founder and former CEO Changpeng Zhao (CZ) can’t ​return​ to the United Arab Emirates before sentencing.

Bearish News

How to invest in Crypto & NFTs right now:

It’s still accumulation season.

That’s all for this week

Cheers,

Wyatt

Disclosures

  • This issue of Alts Cafe was brought to you by our friends at ​Alto​.
  • We hold BTC and ETH in our ​ALTS 1 Fund​.
  • There are a couple of affiliate links above. If you click them, we may get a couple of bucks.

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Author

Picture of Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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