Retail investors are locked 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 working today.”
To do this, the company that created the free exchange model, the commission has guaranteed access to eight startups-including Databricks, Stripe, Mercor, and Oura-collecting themselves in a vehicle called Robinhood Ventures Fund I. This fund, which includes Ramp, Airwallex, Revolut, and Boom, was set last month with an ambitious goal, but wanted to invest less than 1 billion.
On Thursday, Robinhood announced that the fund had grown $658.4 million – which could reach $705.7 million if the underwriters use their full quota. The 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 is in stark contrast to another effort to give investors exposure to busy startups. When Destiny Tech100 – a publicly traded, closed-end fund that holds stakes in 100 venture-backed companies including SpaceX, OpenAI, and Discord – went live on the NYSE in March 2024, its shares rose from a reference price of $4.84 to an opening trade of $8.25, eventually closing at $9.00 on its first day.
The Destiny Tech100 has continued to rise since it went public. The fund closed trading Friday at $26.61, which is 33% of its net asset value of $19.97, meaning its shares are trading above the actual value of its underlying assets.
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 that RVI lacks exposure to companies widely expected to go public in large numbers: OpenAI, Anthropic, and SpaceX.
Robinhood wants to address this. RVI intends to add more startups to the fund, eventually aiming to hold what Robinhood Ventures President Sarah Pinto described to TechCrunch as “fifteen to 20 late-stage growth companies.” The company’s CFOShiv Verma, told Axios Pro on Friday that Robinhood is looking for exposure to OpenAI.
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But getting access to these top companies is not easy at all. Robinhood aims to directly enter their cap tables directly through primary capital raising or secondary share sales – and that is difficult even for a company with deep roots in Silicon Valley.
The cap table – the official record of who owns equity in a company – is heavily guarded at top startups, and winning 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 any of these companies, and the investment rounds are very expensive,” Pinto admits.
That’s one of the reasons why democratizing private markets is easier said than done, and why so many companies that retail investors really want to own are, at the moment, out of reach.
