Small investors are famously shut out of the startup world. Robinhood is trying to change that by allowing the general public to invest in a portfolio of what it calls “some of the most exciting private companies operating today.”
To do so, the company that pioneered the commission-free brokerage model has secured access to eight startups — including Databricks, Stripe, Mercor and Oura — by grouping them into a vehicle called Robinhood Ventures Fund I. The fund, which also includes Ramp, Airwallex, Revolut and Boom, last month raised $1 billion in private companies, not under par but over the top. than expected.
On Thursday, Robinhood announced that the fund had raised $658.4 million — which could reach $705.7 million if insurers exercise their full allocation. Shares, priced at $25 in the offering, began trading on Friday and closed the day at $21, down 16%.
RVI’s reception on Wall Street stands in stark contrast to another effort to give individual investors exposure to buzzy startups. When the Destiny Tech100 – a closed-end exchange-traded fund that owns stakes in 100 venture-backed companies, including SpaceX, OpenAI and Discord – went live on the NYSE in March 2024, stocks rose from the reference price of $4.84 to an opening trade of $8.25, finally closing the first day at $9.00.
The Destiny Tech100 has continued to climb since its public debut. The fund closed trading Friday at $26.61, a 33% premium to its net asset value $19.97meaning its shares trade well above the true value of its underlying holdings.
So what explains why retail investors aren’t as excited about Robinhood’s fund as they are about the Destiny Tech 100? The most likely explanation is RVI’s lack of exposure to the companies widely expected to go public at huge valuations: OpenAI, Anthropic and SpaceX.
Robinhood is trying to address this. RVI plans to add more startups to the fund, eventually aiming to hold what Robinhood Ventures president Sarah Pinto described to TechCrunch as “15 to 20 of the best late-stage growth companies.” CFO of the companyShiv Verma, he told Axios Pro on the Friday that Robinhood looks at exposure to OpenAI.
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But securing access to these high-profile companies is far from straightforward. Robinhood aims to get into its capital boards directly through primary capital raises or secondary share sales — and that’s difficult even for a company with deep roots in Silicon Valley.
A cap board – the official record of who owns shares in a company – is closely guarded at most high-profile start-ups, and to win a seat in one requires either being invited by the company or buying shares from existing investors with the company’s blessing.
“It’s very difficult to get into some of these companies and the investment rounds are very expensive,” Pinto acknowledged.
This is just one of the reasons why the democratization of private markets is easier said than done, and why the companies that most retail investors really want to own remain, for now, out of reach.
