Rally Rd

Rally (originally Rally Rd., operating entity RSE Markets, Inc.) is a New York City-based alternative asset investment company that lets retail investors buy and sell equity shares in collectible assets. The company sources, verifies and acquires items from collections and individuals, places each item into a separate entity that is qualified with the U.S. Securities and Exchange Commission as a security, and splits that entity into equity shares. Shares are sold through an "Initial Offering" on Rally's mobile app and web platform, open to investors of all sizes and not restricted to accredited investors, with share prices commonly starting around $50 and some offerings priced as low as $5 per share.

After an initial offering and an approximately 90-day lock-up period, shares become tradable in-app through bid/ask trading facilitated by registered broker-dealers, with monthly trading windows (9:30 a.m. to 4 p.m. Eastern on the asset's designated day) that support market and limit orders. Rally began with classic and exotic cars — assembling a collection of nearly 30 vehicles, with the first vehicle offering completed in 2017 — and from 2019 expanded to more than 300 assets across sports cards and memorabilia, comic books, rare books and literature, video games, watches, handbags and other luxury goods, wine and whiskey, art, NFTs, musical instruments and natural history artifacts. Reported example assets include a 1909-1911 T206 Honus Wagner card ($520,000 initial offering, $52 per share), a Donkey Kong 3 video game ($114,000, $5 per share), a BMW E36 M3 LTW ($118,500, $47 per share), a 1937 Heisman Trophy, a Mike Trout rookie autograph card, Andy Warhol artworks, a signed Apple I computer, a broadside copy of the Declaration of Independence, lunar meteorites and dinosaur fossils.

Rally takes custody of the assets it lists, insuring them from the point of shipment and storing them in climate-controlled facilities at several U.S. locations, including warehouses in Upstate New York and Pennsylvania; investment cars are not registered for road use. The company has also displayed assets on a rotating basis in a New York showroom.

Founding story

The company was founded in 2016 by Christopher (Chris) Bruno, Rob Petrozzo and Maximilian Niederste-Ostholt, starting with the securitization of classic cars via a mobile app. An early New York City pop-up displaying the cars drew the attention of Acorns co-founder Jeff Cruttenden, who later invested in the company.

Business model

Each collectible is securitized into its own entity (structured as an LLC subsidiary) whose equity shares are sold to investors via SEC-qualified offerings and then traded on Rally's in-app secondary market through registered broker-dealers. Sellers consigning assets can take all cash or elect equity retention, receiving part of the offer price in cash and keeping a percentage of the asset in tradable equity. Assets are intended as long-term holds, and Rally may sell an asset when it judges conditions favorable, distributing proceeds proportionally to shareholders; distributions may also arise from dividends or share sales at a profit.

The app and account are free, with no commissions, trading fees or management fees charged to investors. As of 2018 the company was not profitable and said it intended to monetize its collection through sponsorships, monetized media around the assets, events and merchandise, plus a planned premium subscription tier while maintaining a free option.

Traction

Reported user growth from more than 50,000 iOS users in September 2018 (with 800% active user growth since December 2017) to about 200,000 users by September 2020 across roughly 120 completed offerings representing more than $15 million of assets, with transactions up about 195% year over year. As of March 2021 Rally reported approximately 200,000 users and nearly $30 million of merchandise; later material cites more than 200 completed collectible IPOs, over 300 listed assets, and over 250,000 users. Sports memorabilia was cited as the most popular category in 2020.

Latest developments

In October 2021 Rally raised a $15 million follow-on to its Series B led by Wheelhouse with participation from creators and media figures including Josh Richards, Griffin Johnson, Noah Beck, John Stamos, Connor Schell and Bill Simmons, with items to be featured on History's "Pawn Stars." Reported total funding reached approximately $91 million as of 2023. In 2023 the SEC charged Rally with operating an unregistered securities exchange, settled with a $350,000 civil penalty and no admission of wrongdoing.