Hello everyone, as we approach the end of the year, it’s that time when we take a pause to reflect on the past 12 months. For us and many of our portfolio companies and users, 2023 has been one eventful year.
The year kicked off with market turmoil, leading to fears of a downturn and a significant drop in startup investments. Many startups shut down, creating a sense of doom and gloom. Interest rates rose, and startup valuations fell. Despite this, I believe and have previously written that valuations have now stabilized, returning to pre-pandemic levels.
This wasn’t an easy period, with rising interest rates and falling valuations adding to the challenges. However, amid the chaos, we found new ways to thrive and help the startup community thrive – starting with the introduction of a new business line, one that we are immensely proud of – SPVs-as-a-service.
Our DIY SPV platform gained traction since its launch in late June, evolving into a significant revenue source for us.
On the investment platform itself, we recognized the investor need for liquidity, as investors had less of a desire to be tied up for seven to ten years in a startup. This led us to introduce a somewhat liquid** asset class – hedge funds – on our platform, providing accredited investors access to prestigious funds like the Svelland Global Trading Fund (SGTF) – the No. 2 ranked global macro strategy fund by Barclay Hedge. SGTF generated a 3-yr compound annual return of 43.65% according to the Q2 2022, Barclay Managed Funds Report.
Svelland Global Trading Fund presently has a minimum investment size of $3 million. Through Propel(x), however, it was accessible at a minimum check size of $25,000. We’re immensely pleased to see its continued success. I especially want to highlight Tor Svelland, the founder, who shared his insights on a webinar with our investors. If you have not watched the webinar yet, I encourage you to register on Propel(x)* and watch this – Tor’s expertise is truly exceptional and we are grateful to have been able to partner with them.
With the introduction of hedge funds on the Propel(x) platform, we welcomed Dr. Frank Sortino as an advisor to Propel(x). The hedge fund industry recognizes his name instantly as the inventor of the Sortino Ratio – a widely used metric to measure the performance of hedge funds alongside the Sharpe Ratio. Aside from his hedge fund expertise, Dr. Sortino is a warm, approachable individual with great enthusiasm for democratizing access to alternative investments – our missions and stars aligned in 2023!
I had accurately forecasted a sustained rise in interest rates throughout the year, which did materialize, with a leveling off expected towards the end of the year. As I anticipated, we have arrived now at that inflection point, with the rates now expected to be cut in 2024.
The global economy is influenced by both the U.S. and global trends. We have been contending with two significant geopolitical events, consuming our resources and mind space.
Looking ahead, my best guess is that the first half of 2024 might mirror the challenges of the past year, with ongoing turmoil and economic uncertainty. However, my optimism grows for the second half, anticipating positive shifts.
As we enter the season of good tidings, let us prioritize spending time with our families and loved ones. These moments of joy and reflection serve as anchors, providing strength throughout the year, even in the face of stress.
Wishing everyone the happiest of holidays and looking forward to the promise of 2024.
*Propel(x) is an investment platform for accredited investors only. All investment opportunities presented on the Propel(x) platform are speculative, illiquid, and highly risky. You run the risk of losing your entire invested capital.
** Hedge funds are not always liquid and usually not immediately redeemable. Redemptions may be constrained based on rules that are laid out in the investment prospectuses. Please read the investment documents carefully and conduct your own diligence before making an investment decision. This is not a recommendation or a solicitation for a securities transaction, it is merely a high-level informational discussion.