A Long Island startup that uses artificial intelligence to grade the quality and authenticity of baseball cards has been acquired by a collectibles company backed by Mets owner Steve Cohen and other investors. Newsday's Steve Langford has the story.  Credit: Newsday / Raychel Brightman/Raychel Brightman

A Long Island startup that uses artificial intelligence to grade the quality of baseball cards has been acquired by Collectors Universe Inc., backed by Mets owner Steve Cohen and other investors.

The acquisition of Stony Brook-based Genamint Inc. closed on April 13 and was announced Wednesday. Financial terms were not disclosed.

In February, publicly traded Collectors Universe was taken private in a $853 million deal by angel investor and sports card collector Nat Turner, Manhattan investment firm D1 Capital Partners LP and Cohen Private Ventures, the family investment vehicle of the New York Mets owner.

Others in the investor group include Brooklyn Nets forward Kevin Durant, Arizona Cardinals wide receiver Larry Fitzgerald and former tennis player Andy Roddick.

Kevin Lenane, founder and chief executive of Genamint, will run the product management team at the PSA (Professional Sports Authenticator) unit of Collectors Universe, based in Newport Beach, California.

Kevin Lenane, founder of Stony Brook-based Genamint, a company that uses artificial...

Kevin Lenane, founder of Stony Brook-based Genamint, a company that uses artificial intelligence to grade the quality of baseball cards. Genamint was acquired this month by Collectors Universe. Credit: Newsday/Thomas A. Ferrara

Lenane said interest in sports collectibles has been on fire in recent months.

"The market got extremely hot," he said.

Genamint was in the midst of raising a $500,000 funding round when Turner approached the four-person company with a buyout offer, Lenane said.

PSA has seen "an unprecedented surge in card submissions" in the past 14 months and plans to make additional investments in technology and capacity, the company said in a statement. Owners submit cards for grading in hopes of setting their value for possible future transactions.

In addition to grading sports trading cards, PSA authenticates autographs and sports memorabilia.

Turner, executive chairman of Collectors Universe, said the company will push to reduce a logjam of cards by improving the grading process that now relies on labor intensive "artisan" techniques.

The mobile phone app developed by Genamint examines each pixel of a sports card and compares it to what the pixel should look like.

"An old card might have a dinged-up corner," Lenane said. "That will take the grade from a 9 to a 5. On the right card, that difference could be worth a million dollars."

A  "Mint 9" 1952 Topps Mickey Mantle card sold in...

A  "Mint 9" 1952 Topps Mickey Mantle card sold in January for $5.2 million.  Credit: AP/David Zalubowski

In January, for example, a Topps 1952 Mickey Mantle rookie card sold for $5.2 million. The card was graded Mint 9 on a 1 to 10 scale.

Lenane said the heady valuations provide plenty of incentives for owners to try to upgrade their cards by any means necessary.

One common method used to deceive potential buyers is to remove imperfections by putting a card in a press, he said. The press expands the card, which then requires the swindler to trim the edges.

"I'd say it's in the realm of forgery," Lenane said. "I suspect we'll see some legal issues down the pike [for fraudsters]."

Lenane said that the software won't replace humans who grade cards, but will assist them.

The software also will assign a unique identifier to each card to track provenance, ownership and condition changes.

Collectors Universe also has a unit for coin collectors and Lenane said his software eventually could be adapted for that market as well.

In the last 30 years, PSA has certified more than 40 million collectibles valued at more than $1 billion, the company said.

Turner said the boom in cards and memorabilia is part of a larger shift away from precious metals and toward a new class of alternative assets.

In the eyes of millennials, he said, video games, sneakers, cryptocurrency and sports cards are "an alternative asset," he said.

An upstart sports card company, Alt, launched in March after closing a $31 million funding round. California-based Alt claims it will set valuations on sports cards and let clients buy and sell on its marketplace in much the same way that people manage their stock portfolios.

In 2015, Lenane sold another company, Veenome, to Manhattan-based Integral Ad Science, which provides services to online advertisers. Technology from Veenome evaluated videos for visual and audio quality.

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