Robinhood’s startup fund stumbles in NYSE debut

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

To bash this, the institution that pioneered the 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, acceptable retired past period with an ambitious $1 cardinal target, but request for this caller mode of investing successful backstage companies was little than expected.

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

RVI’s reception connected Wall Street stands successful stark opposition to different effort to springiness idiosyncratic 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 the NYSE successful March 2024, its shares surged from a notation terms of $4.84 to an opening commercialized of $8.25, yet closing its archetypal 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 commercialized good supra the existent worth of its underlying holdings.

So what explains wherefore retail 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 the companies wide expected to spell nationalist astatine tremendous valuations: OpenAI, Anthropic, and SpaceX.

Robinhood is looking to code this. RVI intends to adhd much startups to the fund, yet aiming to clasp what Robinhood Ventures President Sarah Pinto described to TechCrunch arsenic “15 to 20 of the 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 superior raises oregon secondary stock income — and that’s hard adjacent for a steadfast with heavy roots successful Silicon Valley.

A headdress array — the authoritative 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 the institution oregon purchasing shares from existing investors with the company’s blessing.

“It’s precise hard to get into immoderate of these companies, and the concern rounds are precise expensive,” acknowledged Pinto.

That is conscionable 1 of the reasons democratizing backstage markets is easier said than done, and wherefore the companies astir retail investors really privation to ain remain, for now, retired of reach.