Robinhood files for a private fund for retail investors

Robinhood announced on Monday that it is introducing a fund that is meant to expand retail investors’ access to private markets, in a bold expansion beyond its core brokerage services.

Popular with retail investors, the trading platform revealed it filed plans with regulator, the Securities and Exchange Commission (SEC) for this new fund dubbed Robinhood Ventures Fund I.

Robinhood makes a shift towards inclusive venture capital

According to the firm, the fund is meant to democratize access to private startups and potentially shape how everyday retail investors participate in high growth opportunities that have for long been a preserve of the elite – venture capital firms, institutions and the ultra-wealthy.

This move also comes on the backdrop of rising interest in private markets where valuations have surged due to AI and digital innovations.

Data cited by Robinhood’s newsroom post on Robinhood Newsroom shows that the number of listed domestic firms in the US has decreased, pushing more capital into private entities that often yield outsized returns for institutional players.

“For decades, wealthy people and institutions have invested in private companies while retail investors have been unfairly locked out,” said Robinhood CEO Vlad Tenev in a statement.

“With Robinhood Ventures, everyday people will be able to invest in opportunities once reserved for the elite.”

Tenev.

If SEC approves the Robinhood Ventures Fund I, it will subsequently list on the New York Stock Exchange under the ticker RVI. According to a statement, its shares will be accessible to the public via various brokerages among them Robinhood’s own platform.

The fund is expected to focus on investing in “a concentrated portfolio of private companies at the frontiers of their respective industries,” according to Robinhood.

The Monday announcement is the latest in a series of strategic expansions by Robinhood as it recently coveted a spot on the S&P 500 and introduced a new social media feature known as Robinhood Social within its app during the past two weeks alone. As previously reported by Cryptopolitan, the social media app will roll out next year with a select group of customers having invitations before rolling out to all users.

The new fund aligns with the firm’s ecosystem

The fund announcement also comes following the firm’s and controversial entry into tokenized equities in Europe, which offered exposure to private giants like the ChatGPT maker OpenAI and SpaceX.

This initiative attracted criticism from OpenAI and scrutiny from European regulators, highlighting the complexities of innovating in the private market space.

The filing also underscores the firm’s aggressive pivot from its origins as a commission-free stock trading app towards a more “diversified, multilane financial platform,” a transformation which has been significantly powered by the firm’s booming cryptocurrency business.

Earlier this year, the firm revealed that transaction based revenues had climbed 77% year-over0year, largely driven by crypto trading.

Its second quarter earnings also highlighted this momentum as revenue from crypto products surged 98% year-over-year to $160 million. According to the firm, total crypto trading volumes reached $35 billion. This growth, Robinhood said, was substantially driven by the June acquisition of the veteran European crypto exchange Bitstamp, which brought with it over 50 regulatory licenses and accounted for $7 billion in trading volume in second quarter alone from its institutional client base.

Now, the introduction of the Robinhood Ventures Fund I marks a direct challenge to the traditional structures of private equity and represents a significant step in the company’s stated mission “to democratize finance for all.”

Market watchers have also noted that this fund could lower barriers for retail investors, who have historically been left out due to high minimum investments and accreditation requirements.

A report by WealthManagement.com shows how the fund, pending approval by SEC will enable ordinary users to gain exposure to startups before they can go public, potentially through tokenized assets or direct equity stakes.

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