Robinhood prepares to launch second retail venture fund

Robinhood is preparing to launch a second retail venture fund, RVII, having filed a confidential registration for the fund. The move follows the market performance of its inaugural retail venture fund, RVI. While the first fund holds stakes in 10 late-stage companies, RVII will invest in growth-stage and early-stage startups. This shift to younger companies introduces higher risk but also the potential for greater returns. The 10 late-stage companies currently held by RVI are:

• Airwallex
• Boom
• Databricks
• ElevenLabs
• Mercor
• OpenAI
• Oura
• Ramp
• Revolut
• Stripe

Both funds are designed to bypass federal rules that restrict private company investments to “accredited investors.” Under these federal rules, only individuals with a net worth exceeding $1 million or an annual income above $200,000 can invest in private startups. Robinhood’s model offers an alternative. Robinhood CEO Vlad Tenev described the vehicle as “You can think of [Robinhood Ventures] as a publicly traded venture capital firm with daily liquidity. No accreditation requirements and no carry.” Daily liquidity allows investors to buy or sell shares on any day the stock market is open, unlike traditional venture capital funds where capital is locked up for years. “Carry” refers to the percentage of investment profits that venture capital firms typically take as fees, which Robinhood does not charge for these funds.

The launch of RVII follows the performance of the inaugural fund, RVI. Robinhood sought to raise $1 billion for its first fund but fell short of that target. Despite the shortfall, RVI has performed strongly since its debut in early March on the NYSE (New York Stock Exchange). RVI debuted at $21 a share and closed on Monday at $43.69, more than doubling its initial price. Market enthusiasm for the artificial intelligence prospects of the fund’s underlying startups likely fueled the stock’s rise.

Tenev shared his broader vision for retail investing at The Wall Street Journal’s Future of Everything conference last week. He stated that his aspiration is for retail investors to make up a large portion of seed and Series A rounds, similar to their role in public markets. He added that ordinary investors should be allowed in at the ground floor to benefit from the appreciation occurring in private markets.

Why it matters

Robinhood is expanding its retail venture fund offerings, aiming to democratize access to private startup investments that have historically been restricted to accredited investors. If successful, this model could allow retail capital to participate directly in early-stage startup rounds alongside traditional venture capital firms.