You can now invest like a VC…for a fee

If you’ve ever felt the urge to don a fleece vest in mid-summer and start treating X like your unfiltered personal diary: Congratulations, you might be ready to become a venture capitalist.

And now, you don’t have to be a multimillionaire to invest in startups that could become unicorns.

Yesterday, Robinhood’s second fund designed to give regular investors access to startups launched on the New York Stock Exchange. Robinhood Ventures Fund II, trading under the ticker RVII, raised $225.5 million to invest in early-stage private companies, specifically, startups participating in the Y Combinator accelerator program, which has helped launch companies like OpenAI, Reddit, and Coinbase. The fund opened at $22.50 yesterday after its IPO of 8 million shares was priced at $25 a share. Today, the fund closed at $24.5—a 8.9% gain since launching yesterday.

It’s the second time Robinhood has tried this. Back in March, Robinhood launched Robinhood Ventures I, which gives retail traders access to late-stage private companies like OpenAI and Databricks. Since launching, the fund has been on a volatile journey: The stock opened at $21, soared to a high of almost $74 in May, and later fell back closer to its IPO price.

Should you go unicorn chasing?

To Robinhood and other proponents of opening private markets to regular investors, the argument is simple: It’s unfair that retail traders don’t get access to the explosive growth of pre-IPO startups while everyone else has to wait.

But there’s a flip side: Private markets are inherently volatile, and for every OpenAI or Reddit, there are far more startups in the graveyard of failed ventures. RVII’s own filings warn that investors could lose money.

Then there’s the issue of fees. RVII charges traders a 2% annual management fee, in addition to a 20% incentive fee on realized capital gains. While that fee structure mimics how funds work in the VC world, the expense ratios on “set it and forget it” ETFs like VOO or IVV both sit at 0.03%.

Robinhood isn’t the only company trying to make private markets more accessible. Goldman Sachs recently created a platform for high-net-worth investors to make bets on potential unicorns. Meanwhile, private equity and private credit are pushing to be included in 401(k)s as Wall Street increasingly wants everyday investors’ money in private markets.

Whether everyday investors should want to put their money there is another question entirely. —LB