A New Crop of Players Try to “Democratize” Venture Capital

This year, a new generation of companies is aiming to bring venture capital to the masses. Venture capital funds have traditionally been reserved for accredited investors with substantial financial resources, but a growing number of players are now offering access to retail investors.

One of the first firms to launch a venture fund targeting individual investors was Destiny XYZ Inc. in spring 2024. Destiny Tech100 (DXYZ) focuses on late-stage venture-backed companies and is structured as an exchange-listed closed-end fund (CEF). With a market cap of about $1 billion, DXYZ charges a 2.5% annual management fee and requires no accreditation or minimum investment.

Another example is Ark Venture Fund (ARKVX) by Cathie Wood, an interval fund with a $500 minimum investment. The fund's annualized NAV growth over three years is 36.14%, and over one year is 84.75%. However, its annual management fee is 2.75%, and its market cap is $1.24 billion.

Fundrise Growth Tech Fund (VCX) is a notable player in this space. Launched in 2022, VCX invests in AI, space exploration, data infrastructure, and financial technology. With a market cap of $1.22 billion, the fund offers exposure to companies like Anthropic, Databricks, OpenAI, SpaceX, and Epic Games. It is also structured as a CEF with no accreditation or minimum investment requirements and charges an annual management fee of 1.85%.

In March, Robinhood launched Robinhood Ventures Fund I (RVI), a CEF investing in various industries, including aerospace, defense, AI, and financial technology. With a $563.6 million market cap, RVI charges a 2.00% annual management fee and is listed on the New York Stock Exchange. However, the fund's share price has dropped from $77.39 to the mid-$20 range.

Robinhood also launched Robinhood Ventures Fund II (RVII) as a traded BDC with a $20 million initial commitment to 80 companies, 65% of which are in the technology sector. The BDC, with no accreditation requirements, charges a 2% annual management fee and a 20% carried interest fee. As of August, RVII was trading at $22.91 per share with a $208 million market cap.