Key Highlights
- Robinhood raised $225.5 million for a venture fund targeting early-stage startups, including companies in the crypto sector.
- RVII will focus on Y Combinator-backed startups, a group that includes major crypto company Coinbase.
- Robinhood is also expanding its crypto business, recently rolling out access to more than 50 digital assets for eligible UK customers.
Robinhood, a brokerage and trading platform, has raised $225.5 million for its second venture fund, targeting early-stage startups, including companies in the crypto sector.
According to a report from Reuters, Robinhood’s Ventures Fund II (RVII) debuted on Thursday on the New York Stock Exchange (NYSE), giving retail investors a way to gain exposure to private companies that have traditionally been harder for everyday investors to reach.
RVII debuted on the NYSE after pricing 8 million shares at $25 each. Reuters reported that the fund raised $225.5 million in its initial public offering (IPO).
The Crypto Times reached out to Robinhood for further details on RVII’s plans, especially for investments in crypto and blockchain startups, but had not received a response at the time of publication.
RVII will focus on early-stage startups
RVII will invest in early- and growth-stage private companies, with a focus on current and former participants in Y Combinator, a major startup accelerator.
Y Combinator-backed companies include crypto exchange Coinbase, social media platform Reddit, and OpenAI.
The fund’s focus gives RVII potential exposure to startups across technology and crypto, although Robinhood has not disclosed a specific allocation for blockchain or digital-asset companies.
How the new fund works for retail investors
RVII is structured as a business development company, or BDC. The structure allows private-market investments to be placed inside a publicly traded fund. Instead of having to invest directly in a private startup, retail investors can buy shares of RVII and gain exposure through the fund. This approach has over time become more relevant because many startups are staying private for longer.
Companies can raise large amounts of money and reach multi-billion-dollar valuations before offering their shares to the public. This means ordinary investors can miss out on part of a company’s growth before its IPO.
Moreover, RVII is the company’s second venture fund. Robinhood launched Robinhood Ventures Fund I (RVI) in March, with the first fund focused on later-stage startups.
Rich Aberman, RVII’s portfolio manager, said the fund is at the “frontier” of the venture industry. He said he hoped the move would benefit everyday Americans and retail investors who have historically been outside the wealth created by Silicon Valley startups.
“Not only is this one of the more interesting things happening in venture at the moment, it’s like the frontier of that industry,” he said.
Robinhood’s first venture fund already made an investment
Robinhood has been building its business beyond traditional stock trading. The company became widely known in 2021 for commission-free trading aimed at individual investors.
RVI has already invested in private companies, giving its shareholders exposure to businesses that have not yet entered public markets. One recent investment was in Whatnot, a live shopping platform. RVI invested about $30 million in preferred stock as part of Whatnot’s $545 million Series G funding round.
Robinhood plans for more venture funds
The company is already looking beyond its second fund. Sarah Pinto, head of Robinhood Ventures and president of RVII, said Robinhood is working on funds three, four, five and six. However, she said the company does not want to rush and wants to build funds where it can “uniquely deliver performance.”
The launch comes as Robinhood expands its wider financial business. The company recently began rolling out cryptocurrency trading to eligible customers in the United Kingdom, offering more than 50 digital assets through its partnership with Bitstamp UK. The service includes assets such as Bitcoin, Ether and XRP.
For RVII, the immediate focus is private companies, particularly startups connected to Y Combinator.
With $225.5 million raised at launch, Robinhood is giving its retail investor base another route into a part of the market that has traditionally been reserved for venture capital firms and wealthy investors.
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