Yieldstreet offers investors access to art, real estate and other alternatives

Yieldstreet, a New York City based digital investing platform, announced today that it raised $100 million in a funding round.

“We’re on the brink of the greatest wealth transfer in history as Baby Boomers pass the torch to new generations. The consumer has changed, yet the tools and infrastructure in wealth management haven’t kept pace,” Milind Mehere, co-founder and chief executive of Yieldstreet, said in a statement.

Yieldstreet was founded in 2015 by Mehere, 49 years old, and Michael Weisz as a digital platform to provide retail clients with access to investing in commercial and consumer loans, real estate, marine finance, art and other alternative investments, historically the domain of the ultrawealthy and institutional investors. Its pitch to investors is that it generates “returns with typically low correlations to traditional markets.”

Accredited U.S. investors – those who earn more than $200,000 annually or who have a net worth of at least $1 million – can invest in individual offerings or in three-to six-month notes offering higher interest than most money market funds and fixed deposits, according to the company. Those, with lower income and assets, can invest in a multi-asset fixed income fund.

Yieldstreet has more than 270,000 members. The average age of its investors is reportedly in the 30′s. The company has over 100 employees in New York City and in offices in Brazil, Greece, and Malta.

So far over $1.6 billion has been invested through its platform. Yieldstreet says it has returned over $960 million in principal and interest to investors. It charges a 1.5% annual fee on invested assets and expects revenues to reach $100 million this year, according to CNBC.

  Lawsuit against Yieldstreet

In September 2020, a class action lawsuit was filed by Zeissler, a New York based law firm, along with three other law firms, representing four YieldStreet clients. The lawsuit alleged that Yieldstreet’s “products are poorly sourced and structured, with a default rate five times” higher than even junk bonds.

The previous month, according to The Wall Street Journal, the Securities and Exchange Commission and the Federal Bureau of Investigation were seeking information on some of Yieldstreet’s business dealings. While stating that it did not believe it was the target of any investigation, Yieldstreet informed the Journal that it “notified authorities in different countries about what it believes to be a fraud scheme that YieldStreet was ensnared in.”

Yieldstreet idea during 2009 financial crisis

Milind Mehere had the idea for YieldStreet in 2009, during the financial crisis. Despite following the golden Wall Street rule for investing – 60% in stocks and 40% in bonds – his portfolio was down. “I had done everything right…and I was left holding the bag,” he told Crunchbase.

“What’s the path to financial independence? Not with overexposure to the stock market. I wanted access to the same investment products used by hedge funds and institutions, but I…didn’t have it. We built Yieldstreet to change that,” says Mehere in a post on YieldStreet’s site.

Earlier, in 2005, Milind Mehere co-founded Yodle, which helped hundreds of thousands of small and medium sized businesses market their businesses online. He served as the General Manager for its Canadian operations. Yodle, which grew to $200 million in revenue, employed more than 1,400. In 2016, Yodle was acquired by Web.com for $342 million.   

From 2014 to 2018, Mehere was an investor and advisor to the master franchise in India for Coldwell Banker, the real estate brokerage firm. He is an investor and advisor to Dagne Dover, an online seller of handbags.  

Mehere earned an MS in Industrial Engineering from the State University of New York, Buffalo, and a BS in mechanical engineering from Mumbai University.

Hrishi Dixit serves as the Chief Technology Officer (CTO) of YieldStreet. Earlier, he was the founding CTO of LearnVest– a New York based financial planning startup acquired by Northwestern Mutual in 2015 for over $300 million. He also co-founded, and serves as an advisor to Wellsbi, an early stage digital health startup.

Dixit was the co-founder of Gordian Labs, a boutique software development and consulting firm that specialized in financial systems and internet startups, where many successful startups like LearnVest and Twilio were “tech-incubated.” He continues to serve as an advisor and angel investor for many startups, particularly in financial technology and digital health.

Dixit earned a MS in Mechanical Engineering, with a minor in Computer Science, from Cornell University in 1996. He holds a B.E. in mechanical engineering from Pune University, 1993.

Yieldstreet will use the $100 million it raised to attract more customers, develop new investment products, explore international expansion, and pursue strategic acquisitions.Its mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025

Today’s investment round was led by Tarsadia Investments and include Soros Fund Management. Mitch Caplan, President of Tarsadia Investments, was a former CEO of E*TRADE, an online brokerage and investment platform. Last year, E*TRADE was bought by Morgan Stanley for $13 billion.

With ten-year U.S. Treasury bonds yielding less than 2% - currently 1.5% - retirees cannot earn enough to support themselves by investing in bonds, notes Caplan. So alternative investments offered by YieldStreet “are not optional but needed for every portfolio.”

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