Robinhood’s startup fund stumbles in the NYSE

Marketers lock themselves out of the startup world. Robinhood is trying to change that by allowing ordinary people to invest in what it calls “some of the most exciting companies working today.”

To do this, the company that pioneered free commission has acquired the opportunity of eight startups, including Databricks, Stripe, Mercor, and Oura-putting them in a vehicle called Robinhood Ventures Fund I. The fund, which also includes Ramp, Airwallex, Revolut, and Boom, was launched last month with the goal of returning $1 billion.

On Thursday, Robinhood announced that the fund was raised $658.4 million – which could reach $ 705.7 million if the underwriters use their entire share. Shares, priced at $25 per share, began trading on Friday and closed the day at $21, down 16%.

RVI’s reception on Wall Street is in stark contrast to other attempts to give individual investors a head start. When Destiny Tech100 — a publicly traded, closed-end fund active in 100 venture-backed companies including SpaceX, OpenAI, and Discord — listed directly on the NYSE in March 2024, shares went up from a high of $4.84 to an opening trade of $8.25, eventually closing its first day at $9.00.

The Destiny Tech100 has been on the rise since its inception. The stock closed Friday’s trading at $26.61, a 33% premium to its stock price. $19.97meaning that his stock trades for more than the actual value of his holdings.

So what explains why retail investors aren’t as excited about the Robinhood fund as they are about the Destiny Tech 100? A possible explanation is that RVI has lost its way to companies that were expected to present themselves in the mainstream: OpenAI, Anthropic, and SpaceX.

Robinhood wants to address this. RVI wants to add more startups to the fund, ultimately with the goal of holding what Robinhood Ventures President Sarah Pinto described to TechCrunch as “15 to 20 of the slowest growing companies out there.” The opinion of the company’s CFOShiv Verma, told Axios Pro Friday that Robinhood is looking at the transparency of OpenAI.

But getting access to these top companies is not easy. Robinhood wants to get into their tables directly through raising initial capital or selling shares – and that’s a challenge even for a company with Silicon Valley roots.

The cup table – the official profile of the owners in the company – is more protected in the top startups, and success in one place requires an invitation from the company or the purchase of shares from those who already have the company’s blessing.

Pinto admits: “It’s very difficult to get into all these industries, and the investment costs are very expensive.

This is one of the reasons why the democratization of business markets is easier said than done, and the reason why many companies want to be part of it, for now, out of reach.