Robinhood filed an application with the U.S. Securities and Exchange Commission on Monday, and announced it would launch a new disclosure fund that holds stocks in the startup.
The idea behind “Robinhood Ventures Fund I” is to allow all retail investors to make money at the hottest startups before they go public.
The current version of the application is now available, but Robinhood has not yet filled in the fine print. This means you don't know any other details such as the number of shares you plan to sell or the management fees you plan to bill. It is also unknown which startups they hope to eventually retain the fund. The document says it “hopes” to invest in aerospace and defense, AI, fintech, robotics and software aimed at consumers and businesses.
A big pitch for Robinhood is that retail investors are excluded from the profits accumulated by startup investors like VCS. That's true to some extent. “Certified Investors” or those with a net worth large enough to handle risky investments already have a variety of ways to buy stocks at startups, such as venture companies like OurCrowd.
Retail investors who aren't rich enough to be certified have more limited options. There is a fund similar to that proposed by Robinhood. This includes mutual funds that hold stakes in companies such as Chathy Wood's Ark Venture Fund, Humanity, Databricks, Openai and SpaceX.
Robin Hood's last such efforts were debatable. The trading company launched what was called private “tokenized” stocks in the EU earlier this year, implying that these tokens gave retail investors the ability to make money from stocks in private companies like Openai. However, Openai criticized the products and pointed out that buyers of these tokens were not actually buying Openai stocks – tokenization or other. They were simply buying tokens that were fixed at the price of private companies' stocks.
This new closed-end “Venture Fund I” is a more classic, mutual fund style approach. We don't know yet when the new Robinhood fund will become available. During the quiet period, Robin Hood declined to comment.
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