Retail investors are notoriously excluded from 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 gained access to eight startups, including Databricks, Stripe, Mercor and Oura, by consolidating them into a vehicle called Robinhood Ventures Fund I. The fund, which also includes Ramp, Airwallex, Revolut and Boom, last month set an ambitious $1 billion target, but demand for this new way of investing in private companies has been lower than expected.
On Thursday, Robinhood announced that the fund had raised $658.4 million – which could reach $705.7 million if subscribers exercise their full allocation. The shares, priced at $25 in the offering, began trading Friday and closed the day at $21, a decline of 16%.
RVI’s reception on Wall Street stands in stark contrast to another attempt to give individual investors exposure to hot startups. When Destiny Tech100 – a publicly traded closed-end fund with stakes in 100 venture-backed companies, including SpaceX, OpenAI and Discord – listed directly on the NYSE in March 2024, its stocks jumped from a reference price of $4.84 to an opening trade of $8.25, eventually closing its first day at $9.00.
Destiny Tech100 has been on a steady climb since its public debut. The fund closed Friday at $26.61, a 33% premium to its net asset value of $19.97meaning its shares are trading well above the true value of its underlying holdings.
So what explains why retail investors aren’t as excited about the Robinhood fund as they are about the Destiny Tech 100? The most likely explanation is RVI’s lack of exposure to companies widely likely to IPO at huge valuations: OpenAI, Anthropic, and SpaceX.
Robinhood is looking to solve this problem. RVI intends to add more startups to the fund, with the eventual goal of holding what Robinhood Ventures President Sarah Pinto described to TechCrunch as “15 to 20 of the best late-growth-stage companies.” The company’s financial directorShiv Verma, told Axios Pro Friday that Robinhood plans exposure to OpenAI.
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But securing access to these leading companies is far from simple. Robinhood aims to gain direct access to its cap tables through primary capital raises or secondary stock sales — and that’s difficult even for a company with deep roots in Silicon Valley.
A capitalization table – the official record of who owns equity in a company – is closely guarded at most top startups, and to earn a spot at one of them, one must either be invited by the company or buy shares from existing investors with the company’s blessing.
“It’s very difficult to get into one of these companies and the investment rounds are very expensive,” Pinto acknowledged.
This is one reason why democratizing private markets is easier said than done, and why the companies that most retail investors actually want to own remain, for now, out of reach.
Marina Temkin is a venture capital and startups reporter at TechCrunch. Before joining TechCrunch, she wrote about venture capital for PitchBook and Venture Capital Journal. Earlier in her career, Marina was a financial analyst and earned her CFA designation.
You can contact or check Marina’s outreach by sending an email marina.temkin@techcrunch.com or via encrypted message at +1 347-683-3909 on Signal.
