What happens when you bring together an entrepreneur, a product designer and an investment banker who all really love collector vehicles? You get Rally Rd., an app for buying and selling equity shares in classic cars.
Launched in 2016, the company’s SEC-compliant platform lets users purchase shares in Ferraris, Porsches, Lamborghinis and other classic models for as little as $50 per share. The company says it has 50,000 members that have invested millions. Currently, there are just 10 cars available to purchase stakes in, though Rally Rd. expects to have 100 available on the app by the end of 2019.
The New York-based startup has just closed its second round of funding, a $7 million Series A led by Upfront Ventures, with participation from Anthemis Group, Social Leverage, WndrCo, Nas, Betterment co-founder Eli Broverman and Acorns co-founder Jeff Cruttenden. Earlier this year, it announced a $3 million seed round led by Columbus Nova.
Rally Rd.’s co-founders Chris Bruno and Rob Petrozzo told TechCrunch the crypto boom and bust really put digital asset investing in the mainstream, helping to bolster business that would have seemed pretty odd just a few years ago.
The pair plan to use the investment to open what they call a “live investing ecosystem,” a vehicle showroom where users can go to participate in initial car offerings in-person. The first will be in New York’s SoHo neighborhood, with other locations to follow in Los Angeles, South Florida and possibly Texas, where they have a strong user base.
“We want to create that Apple Store atmosphere where anyone can come in and learn about equity investing on the spot,” said Petrozzo, Rally Rd.’s chief product officer.
Through a subsidiary company, Rally Rd. purchases collector vehicles and holds the cars’ titles. The startup then hosts SEC-registered offerings, essentially an IPO for a car, where investors can buy one or more of 2,000 equity shares. The vehicles are registered for sale through a registered broker-dealer available in 32 states; the company is still working on obtaining licenses for the remaining 18 states.
Just like the regular stock market, after the initial offering, Rally Rd. holds regular trading windows for each vehicle where users can buy or sell their shares in an app-based secondary marketplace.
“They’ve literally recreated the NASDAQ or NYSE experience for these assets on the Rally Rd. platform,” Upfront partner Greg Bettinelli, who has joined Rally Rd.’s board of directors, told TechCrunch.
Bettinelli added that the reaction he has seen from Rally Rd. customers is similar to what he saw in the early days of the Amazon-acquired smart doorbell company Ring, mobile sneaker marketplace GOAT and ThredUp, an online consignment store that’s raised more than $125 million to date.
For now, Rally Rd. isn’t making money. They don’t take any management fees or share of the offering. Bruno says their plan to generate revenue is to adopt the Robinhood model and are building out a subscription service for those interested in premium access.
In early 2019, Rally Rd. expects to announce expansions into other verticals, including art and sports memorabilia. At some point, they plan to make the app available around the globe, beginning with Australia, Europe and Canada.