In a Nutshell: If your knowledge of investing comprises traditional stocks, bonds, and mutual funds, then you may be pleased to learn of a firm that’s combining investment opportunities with the excitement of horse racing. MyRacehorse allows investors to purchase shares of racehorses and earn money while experiencing the adventures of racehorse ownership. The company, which produced one Kentucky Derby winner in its second full year of existence, offers investors a myriad of experiences and privileges.
Students and young adults considering which path to take in their lives are frequently presented with one form or another of the following advice: Follow your dreams. For all the times we’ve heard that message growing up, it can be challenging to identify many people in our lives who have actually followed their dreams to achieve success.
Michael Behrens was a marketing executive for a large mattress firm in 2016, but his true passion was horse racing. Although he didn’t have a horse racing background, he had an idea to start a company focused on his passion.
In 2017, Behrens connected with Shona Rotondo, who owned a marketing agency specializing in developing strategies for equestrian brands. Behrens solicited Rotondo’s assistance in realizing his vision — micro-investments in race horses.
MyRacehorse is a micro-share racehorse ownership platform where small investors can own a fractional interest in a racehorse. Behrens is MyRacehorse’s Founder and CEO, and Rotondo is the company’s Head of Marketing.
MyRacehorse launched in May of 2018. Initially, MyRacehorse was only available in California, where Behrens resided at the time. After its launch, the company expanded its services nationwide in 2019.
In 2020, a MyRacehorse horse named Authentic won the Kentucky Derby. Authentic had more than 5,000 owners through the MyRacehorse platform at the time of his Kentucky Derby win. Rotondo said Authentic’s victory brought MyRacehorse increased attention.
“When Authentic won the Kentucky Derby, the news stories and the natural inertia and public relations around it really helped spike MyRachorse’s incredible growth,” Rotondo said. “We couldn’t even satisfy the demand for a while — we just didn’t have enough horses for people to buy after that happened.”
Authentic’s victory attracted business partners to MyRacehorse as well, which Rotondo said also contributed to the company’s growth.
MyRacehorse now has approximately 100,000 registered users in the U.S. and also conducts business in Australia, where Rotondo said there are more than 30,000 registered users.
“Horse racing is woven into the Australian culture,” Rotondo said. “The U.S. market is our largest, but the passion in Australia for horse racing is amazing. Many Australians get into horse racing at a young age.”
Reducing the Risk of Horse Ownership
Horse racing is not a new business, but Rotondo said it is a business that can be difficult for individuals to experience success in.
“There’s a funny saying— if you want to make a million dollars in horse racing, start with $10 million,” Rotondo shared.
Rotondo said millions have been spent on horses that don’t see any success on the racetrack.
“Even if the breeding indicates a horse should win, it’s not an exact science” Rotondo said. “That’s a known risk you take when you purchase bloodstock.”
MyRacehorse reduces the risk of racehorse ownership by sharing it among thousands of investors. MyRacehorse allows investors to purchase shares in horses, similar to an investor buying shares in a company.
“Some investors may just want to buy one share of a horse while others choose to purchase 50 shares — it all depends on the investor,” Rotondo explained. “The fact that you can go and buy a horse with a spectacular pedigree, like Authentic, and only spend a couple hundred dollars is attractive. You’re buying a very small percentage of the horse, but you’re not taking on the full risk of what can be a pretty risky investment.”
The buy page of MyRacehorse’s website lists the details of the horses that are available to invest in. The site lists facts for each horse including the horse’s age, sex, trainer, racing circuit results, breeding insights, health assessment information, and pedigree details. Photos and videos of the horses in action accompany each horse’s details.
MyRacehorse’s website also includes the cost per share of its racehorses alongside the company’s share of ownership in the horse. Rotondo said MyRacehorse owns a majority of each horse listed on its website.
Rotondo said the U.S. Securities and Exchange Commission qualifies investments made available by MyRacehorse.
MyRacehorse provides notices and disclosures to investors to educate them on the risks of investing in racehorses. MyRacehorse’s website also includes information regarding asset costs, brokerage fees, management and due diligence fees, organizational and experiential fees, and operating cost reserves.
“MyRacehorse shares have an operating reserve built in, usually around two years worth of a horse’s expenses, so investors don’t have to pay any additional out-of-pocket fees — ever — after they buy in,” Rotondo said.
Carefully Researched Investment Opportunities
MyRacehorse employs a team of experts who evaluate horses to determine which to pursue for investment opportunities. Rotondo said MyRacehorse sometimes seeks certain types of horses or horses that reside in a specific geographic area. But for the most part, the company seeks solid horses that are attractive to investors.
“Evaluating horses to determine which will be successful isn’t an exact science,” Rotondo said. “If it were, everyone would be very successful in horse racing and making tons of money. Our Bloodstock Team, like most, takes into account key indicators for success such as pedigree, physical composition, and intelligence.”
Rotondo said many of MyRacehorse’s investors are looking to strike gold with their equine investments, and one path to success can be investing in a young horse.
Significant investment gains are more often due to selling a horse’s breeding rights than the purse money gained from a particular race. Rotondo said if a horse wins a popular race, then investors may be able to sell that horse’s stud rights for millions of dollars. If a horse’s offspring are successful, then the horse’s stud fees can rise which leads to higher investment returns.
“It is a high-risk, high-reward business,” Rotondo said. “The big wins are infrequent, but the returns can be huge when they hit. And if you do get lucky with MyRacehorse, each investment is structured in a manner that allows MyRacehorse to distribute the profits on a pro-rata basis. Many alternative ownership concepts have to cap their returns based on the amount invested in abiding by securities laws and regulations, but MyRacehorse offers qualified securities governed by the SEC, allowing profits to be shared with partners fully.”
MyRacehorse Offers Investors a Unique Experience
MyRacehorse provides investors with an asset that can yield financial returns. The company also gives investors an insider’s view of horse training programs and race day preparations.
“Yes, this is an investment and an SEC-qualified security, but it’s so much more than that,” Rotondo said. “It’s not like you get a ton of entertainment value in owning Apple stock. But owning a stable of horses allows investors go on a completely unique and thrilling journey.”
MyRacehorse hosts events throughout the year that allow investors to get close to horses and tour barns, farms, and breeding facilities. Ownership is the key to unlocking a level of access that isn’t available to the public.
MyRacehorse’s app informs investors of horses’ schedules and sends users videos of horses’ workouts and quotes from trainers about a horse’s progress.
“For investors who’ve diversified and have a stable of multiple horses, they’re getting several updates throughout the week,” Rotondo said. “It’s a fun experience.”
MyRacehorse’s shop sells various goods, including coffee mugs, hats, and shirts. Rotondo said the shop is another avenue for investors to celebrate the experience of horse ownership. Investors can customize their purchase by adding the name of a MyRacehorse horse to their item.
“If you’re interested in horses or horse racing at all, investing in MyRacehorse is a great way to go behind the scenes of the sport,” Rotondo said. “It’s a complete experience for investors to embrace the educational components we offer and take advantage of the different events we host. And — if you’re lucky enough to have your horse make it to the winner’s circle — it’s just the best feeling ever.”
This is not an offer to sell or a solicitation of any offer to buy any securities. MyRacehorse offers securities only through the use of an Offering Circular that is part of an Offering Statement qualified by the SEC. For a full list of disclaimers & notices visit myracehorse.com/disclaimer.