How Alts.co monetizes its massive newsletter with an investor membership platform

Its Altea community not only vets potential deals, but also allows members to invest in them.

When people sign up for the Alts.co newsletter, they’re looking to read its deep dives into alternative investments like art, baseball cards, and rare books. But the most serious investors in its audience want access to actual deal flow, and to gain that access, they sign up for Altea, a high-priced membership community that actually vets potential deals and allows them to invest. Not only does Altea generate revenue through the annual membership, but it also charges for management fees and carried interest. In essence, Alts.co is a media company that monetizes via an investment firm.

In a recent interview, co-founder Stefan von Imhof explained why his company settled on this model, how it sources deals, and why he eventually wants to stop selling sponsorships within the newsletter.

Watch the interview in the video embedded below:

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Summary

Stefan von Imhof discussed the evolution of his company, Alts.co, from a Substack newsletter to a membership community focused on alternative investments. Initially, the newsletter covered deep dives into niche assets like baseball cards and water rights, attracting 85,000 subscribers. They later moved to ConvertKit and expanded through acquisitions, reaching 190,000 subscribers. Alts.co launched an investment fund with a 1% management fee and 20% carry, focusing on accredited investors. They also created Altea, a subscription-based community for vetted deal flow. The goal is to transition from sponsored content to community-driven revenue.

Outline

Origin and evolution of Alts.co

Simon Owens introduces Stefan von Imhof and the company Alts.co, which started as a Substack newsletter in 2020.

Stefan explains the initial focus on alternative investments like art, water rights, and baseball cards, which are hard to value and regulate.

The newsletter evolved to include deep dives on these alternative assets, providing detailed analysis and market insights.

So deep dives are definitely our bread and butter. We go deep, and it's very authentic analysis of both markets and opportunities within those markets. We might look at the market for water rights, or the market for tequila as an investment. But we take that a step further, and actually now we do spend a lot of time basically on deal memos, on analyzing an actual opportunity for investing in 80 barrels of tequila. It's basically a giant due diligence exercise.

Stefan emphasizes the importance of authentic, in-depth analysis, contrasting it with short-form content like ChatGPT.

Transition from Substack to Alts.co

Stefan discusses the decision to move off Substack due to the need for more platform flexibility.

The company now manages its operations through ConvertKit, which has since rebranded.

Stefan mentions the growth of the newsletter subscriber base went from 85,000 to 190,000 through acquisitions of other financial publications.

The early monetization strategy involved sponsored deep dives that align well with the other editorial content.

Launch of the investment fund

Stefan explains they launched an investment fund to capitalize on their expertise in alternative investments.

The fund, called the ALTS 1 Fund , follows a 1% management fee and 20% carry structure.

The fund is designed for accredited investors, which limits the audience but aligns with the company's focus on serious investment opportunities.

We basically made a decision that we are absolutely optimizing our company around accredited deals and private opportunities that require accreditation. So we do still work with what are known as Reg A a type offerings, basically crowdfunding opportunities where anyone can invest. But that is not the majority what we do. The majority of what we do is for accredited investors,

That decision has to do with the economics of non-accredited deals. They're not great. There's a lot of overhead and bureaucracy and paperwork, and this is why you've seen a lot of Reg A companies fail or they're not doing well. So yeah, we kind of saw the writing on the wall early, and got out of that game, and now are absolutely squarely focused on accredited investors with our our community.

Stefan explains the challenges and benefits of working with accredited investors, including legal and economic considerations.

Membership community and due diligence trips

Stefan introduces the Altea community, a subscription-based platform for vetted deal flow and peer-reviewed discussions.

The community includes live events and due diligence trips, such as a recent trip to Mexico to investigate a potential investment in 80 barrels of tequila.

The first trip was a success, leading to a concrete deal and a $400,000 investment.

So we actually took a group investor field trip, essentially, where we took 15 folks from the community down to the city of Tequila in Mexico, where it's all made. And this was a due diligence investing trip where we met our dealer in person. We touched the barrels we were about to buy. We went backstage at the distilleries. We met the mayor, really immersed ourselves in the ecosystem, and that's what you have to do if you're gonna get into alternative investing, right? I mean, there's no shortcuts to the due diligence. You just gotta go and actually do the hard work. But instead of making it hard work, we decided to make it something that's kind of baked into the community to begin with. So that first trip was a huge success. Like I said, we took 15 folks down. We learned about not just tequila investing, but investing in Mexico, more broadly. There's a fantastic startup scene down there. And we returned from the trip with a concrete deal on 80 barrels of tequila, which we were able to raise $400,000 US with the community, and we invested in those barrels. They’re there sitting in a warehouse in Tequila that we've been to, ready to sell in about two, two and a half years from now. So that first trip was kind of the archetype of the type of real, hands-on due diligence that we want to do with the community, and it was a perfect proof of concept, and now we're doing that like crazy.

The community model involves creating individual funds for each new deal, offering members the choice to invest in specific opportunities.

Staffing and content creation

Stefan outlines the staffing structure, primarily consisting of himself, his co-founder, and a few contracted researchers and writers.

The company values partnerships with experts within the community for due diligence and deal sourcing.

Stefan emphasizes the importance of quality writing and the challenge of finding good writers. He often hires a mix of experienced journalists and Wall Street analysts.

I vet potential writers by telling them to send me a sample, and I'll know within three seconds. If you're a good writer, that's it. Like good writers are hard to find. Some of them used to work for Goldman Sachs. Their prose tends to be a little less engaging, but their analysis is strong. Others work for financial publications. So their prose is really strong, but you really want to hone in on the analysis and number side of things. Basically, I work really hard to find good writers. Good writers are really hard to find, but when you find one, you know, you hang on to them, treat them well, and that's what we do.

The newsletter strategy involves targeting specific interests and preferences, ensuring relevance and engagement for readers.

Monetization and future goals

The company aims to transition away from charging companies for sponsored placements, focusing instead on leads and community revenue.

Stefan envisions a future where the community generates all revenue through membership fees, deal fees, and carried interest.

Two years from now, I don't want to be charging any companies for any anything up front, period. We want to make money from the community in three ways: from the membership fees, and then from the fees on each deal. There are basically the management fees on each deal, and then from the [carried interest], and that's where the real value is, in the carried interest on each deal. And then it's just pay for performance. The incentives are aligned completely.

The goal is to create a sustainable business model that aligns with the company's mission and values.

Stefan reflects on the evolution from a media company to a more investment-focused platform, emphasizing the importance of connecting people and ideas.

Challenges and opportunities

Stefan discusses the challenges of managing a small company with limited resources and the importance of focusing on accredited deals.

The community model allows for more targeted and effective deal flow, benefiting both the company and its members.

Stefan highlights the importance of staying true to the company's core values and adapting to market demands.

Community engagement and future plans

The company plans to continue hosting live events and due diligence trips, providing unique opportunities for community members.

Stefan emphasizes the importance of community feedback and involvement in the vetting process.

The company is exploring new investment opportunities, including music rights and film financing, leveraging the expertise of community members.

The goal is to create a dynamic and engaged community that drives investment and innovation in alternative assets.