Robinhood plans to launch a startups fund open to all retail buyers 

Robinhood announced Monday it has filed an utility with the U.S. Securities and Trade Fee to launch a brand new publicly traded fund that may maintain shares of startups.

The concept behind the “Robinhood Ventures Fund I” is to permit each retail investor entry to generate income on the most popular startups earlier than they go public.

Whereas the present model of the application is public, Robinhood hasn’t stuffed within the fine-print but. This implies we don’t know what number of shares it plans to promote, nor different particulars just like the administration payment it plans to cost. It’s additionally unclear which startups it hopes this fund will finally maintain. The paperwork says it “expects” to spend money on aerospace and protection, AI, fintech, robotics in addition to software program for shoppers and enterprises.  

Robinhood’s massive pitch is that retail buyers are being unnoticed of the beneficial properties which are amassed by startup buyers like VCs. That’s true to an extent. “Accredited buyers” — or these with a web value giant sufficient to deal with riskier investments — have already got a wide range of methods of shopping for fairness in startups, equivalent to with enterprise companies like OurCrowd.  

Retail buyers that aren’t wealthy sufficient to be accredited have extra restricted choices. There are funds just like what Robinhood has proposed, together with Cathy Wooden’s ARK Enterprise Fund, a mutual fund which holds stakes in corporations like Anthropic, Databricks, OpenAI, SpaceX, and others. 

Robinhood’s final such effort was controversial. The buying and selling firm launched what it called private “tokenized” stocks within the EU earlier this yr, implying these tokens gave retail buyers the power to generate income from shares of personal corporations like OpenAI. Nonetheless, OpenAI denounced the product, declaring that patrons of those tokens weren’t really shopping for OpenAI inventory — tokenized or in any other case. They have been merely shopping for tokens pegged to costs of a personal firm’s inventory.

This new closed-end “Ventures Fund I” is a extra traditional, mutual fund-style, method. As to when Robinhood’s new fund can be out there we don’t know that both but. Robinhood, which is in a quiet interval, declined to remark.