Everything in life carries risks – meaning we all make risk calculations all the time. However, investors are constantly trying to minimize the risk associated with a potential investment. So, how does Yieldstreet approach the due-diligence process to make sure that Yieldstreet and our investor community are taking appropriate risks as we pursue meaningful returns outside of the stock market? Before an offering makes it onto the Yieldstreet platform, it must undergo a stringent multi-step vetting process, designed to comprehensively review an investment opportunity through various risk lenses
Before an offering makes it onto the Yieldstreet platform, it must undergo a stringent multi-step vetting process, designed to comprehensively review an investment opportunity from various risk lenses.
Our multi-step process is the reason that we turn down most investment opportunities we evaluate. In fact, since 2018, less than 10% of all investment opportunities presented to Yieldstreet made it onto the platform1.
Our vetting process includes five stages:
The Yieldstreet originations team screens each opportunity and prospective partner. Yieldstreet leverages its network to access opportunities from multiple sources, including partner originators with successful track records.
We eliminate the potential risks of doing business with those subject to prior scrutiny by others – including past material litigation or even certain government investigations into companies and the decision makers behind them.
After the first screening, both the originations and investment teams evaluate a multi-step review of the track record, experience and reputation in their respective asset classes.
We take a structured, rigorous and holistic approach when scrutinizing originators and opportunities. Our structured assessment is based on multiple factors:
The opportunity is then passed along to the respective Yieldstreet investment team. For example, a multi-family equity ownership opportunity would get passed along to Yieldstreet’s real estate team.
The team will evaluate components of a deal including:
Yieldstreet carries out deal transaction “post mortem” reviews to compare outcomes to
underwriting thesis to ensure continual learning and improvement.
For each investment, the respective Asset Class team prepares a detailed Investment Committee memo designed to help identify any potential risks. They scrutinize and challenge the investment team’s conclusions.
The Green Light Committee (GLC) Is the next opportunity for the teams to identify key considerations and risks that the investment team will need to address and review before moving forward. The Credit Committee (CC) considers opportunities later in the process, ensuring that any issues orquestions raised have been appropriately addressed. The Investment Committee then considers the opportunity once more, and will only clear an opportunity for the Yieldstreet platform following a vote of the Investment Committee.
Once an investment opportunity has made it to the Yieldstreet platform, it still is subject to what we consider the most important vetting stage – our investors’ own decisions. Yieldstreet is ultimately all about empowering investors to exercise their own judgment, based on their own investment philosophies, and educated by the great wealth of information available to all of us.
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