Retail investors have long been excluded from the startup investment world. Robinhood is trying to change that by offering the public a chance to invest in a selection of promising private companies. The company has created the Robinhood Ventures Fund I, which includes stakes in eight startups: Databricks, Stripe, Mercor, Oura, Ramp, Airwallex, Revolut, and Boom.
The fund launched last month with a target of one billion dollars, but investor demand fell short of expectations. Robinhood recently announced the fund raised 658.4 million dollars, a figure that could grow to 705.7 million if underwriters exercise their full options. Shares priced at 25 dollars began trading on Friday and closed the day at 21 dollars, marking a 16 percent decline.
This cool reception contrasts sharply with another recent effort to give individuals access to venture-backed companies. The Destiny Tech100 fund, which holds stakes in companies like SpaceX, OpenAI, and Discord, directly listed on the NYSE in March 2024. Its shares surged from a reference price of 4.84 dollars to close the first day at 9.00 dollars. The fund has continued climbing, recently trading at a 33 percent premium to its net asset value.
A key reason for the differing enthusiasm is likely Robinhood’s current fund composition. It lacks exposure to the most buzzed-about private companies, specifically OpenAI, Anthropic, and SpaceX. Robinhood aims to address this gap. The company plans to expand the fund to include 15 to 20 top late-stage growth companies. Robinhood’s leadership has expressed interest in gaining exposure to OpenAI.
However, gaining access to these elite startups is a significant challenge. Robinhood seeks to get directly onto their capitalization tables through primary raises or secondary share sales. A company’s cap table is closely guarded, and securing a spot requires an invitation from the company or permission to buy shares from existing investors. As Robinhood’s leadership acknowledged, getting into these companies is very difficult and the investment rounds are very expensive.
This highlights why democratizing private markets is easier said than done. For now, the most sought-after companies remain largely out of reach for the average retail investor.