Robinhood’s Startup Fund Stumbles In Nyse Debut

Retail investors are famously locked retired of nan startup world. Robinhood is attempting to alteration that by allowing nan wide nationalist to put successful a portfolio of what it calls “some of nan astir breathtaking backstage companies operating today.”

To do this, nan institution that pioneered nan commission-free brokerage exemplary has secured entree to 8 startups—including Databricks, Stripe, Mercor, and Oura—grouping them into a conveyance called Robinhood Ventures Fund I. The fund, which besides includes Ramp, Airwallex, Revolut, group retired past period pinch an eager $1 cardinal target, but request for this caller measurement of investing successful backstage companies was little than expected.

On Thursday, Robinhood announced nan money had raised $658.4 cardinal — which could scope $705.7 cardinal if underwriters workout their afloat allotment. The shares, priced astatine $25 successful nan offering, began trading connected Friday and closed nan time astatine $21, a 16% decline.

RVI’s reception connected Wall Street stands successful stark opposition to different effort to springiness individual investors vulnerability to buzzy startups. When Destiny Tech100 — a publically traded, closed-end money holding stakes successful 100 venture-backed companies including SpaceX, OpenAI, and Discord — direct-listed connected nan NYSE successful March 2024, its shares surged from a reference value of $4.84 to an opening waste and acquisition of $8.25, yet closing its first time astatine $9.00.

Destiny Tech100 has kept climbing since its nationalist debut. The money closed trading connected Friday astatine $26.61, a 33% premium to its nett plus worth of $19.97, meaning its shares waste and acquisition good supra nan existent worth of its underlying holdings.

So what explains why unit investors aren’t astir arsenic excited astir Robinhood’s money arsenic they are astir Destiny Tech 100? The astir apt mentation is RVI’s deficiency of vulnerability to nan companies wide expected to spell nationalist astatine tremendous valuations: OpenAI, Anthropic, and SpaceX.

Robinhood is looking to reside this. RVI intends to adhd much startups to nan fund, yet aiming to clasp what Robinhood Ventures President Sarah Pinto described to TechCrunch arsenic “15 to 20 of nan champion late-stage maturation companies retired there.”  The company’s CFO, Shiv Verma, told Axios Pro on Friday that Robinhood is eyeing vulnerability to OpenAI.

But securing entree to these high-profile companies is acold from straightforward. Robinhood is aiming to get straight onto their headdress tables straight done superior capital raises aliases secondary stock income — and that’s difficult moreover for a patient pinch heavy roots successful Silicon Valley.

A headdress array — nan charismatic grounds of who owns equity successful a institution — is intimately guarded astatine astir high-profile startups, and winning a spot connected 1 requires either being invited by nan institution aliases purchasing shares from existing investors pinch nan company’s blessing.

“It’s very difficult to get into immoderate of these companies, and nan finance rounds are very expensive,” acknowledged Pinto.

That is conscionable 1 of nan reasons democratizing backstage markets is easier said than done, and why nan companies astir unit investors really want to ain remain, for now, retired of reach.