Robinhood Breaks Wall Street Barriers: Retail Investors Get Exclusive Access to Private AI Startups Via New Fund

Robinhood just flipped the script on private markets. The trading app's new fund will finally let Main Street investors play in the sandbox of Silicon Valley's hottest private AI startups—no VC connections required.

CEO Vlad Tenev dropped the bombshell today, positioning the move as 'democratization' of startup investing. Because nothing says 'power to the people' like letting retail bagholders fund pre-revenue AI vaporware at 100x revenue multiples.

The fund structure bypasses traditional accreditation hurdles through a creative SPV setup. Early allocations reportedly include buzzy AI labs working on everything from quantum machine learning to sentient toaster ovens.

Wall Street gatekeepers are already crying foul. Meanwhile, Robinhood users are dusting off their YOLO strategies—this time for illiquid private shares instead of meme stocks.

Just remember: when these startups inevitably crash, at least you'll own a piece of the wreckage.

Fund access shifts toward smaller investors

Asset managers across the country are actively targeting individuals because the pool of institutional money is no longer the only main source they want.

A recent executive order signed by President Donald TRUMP in August made it easier for employers to include private equity and private credit in retirement savings plans.

This has encouraged firms such as Blue Owl, Blackstone and Apollo to expand beyond their usual large-scale clients and approach everyday investors.

Public markets have been shrinking for decades. At the same time, private markets have ballooned. In 2016, only 20 private companies in the United States were valued at more than $1 billion.

By 2024, that number jumped to more than 1,000. Major AI developers like OpenAI and Anthropic have driven much of this growth.

Over just the past year, ten unprofitable AI start-ups added nearly $1 trillion to their combined valuations through private funding rounds.

The new fund from Robinhood is closed-end, which means investors cannot freely redeem shares at any time. If many people try to exit at once, they may not be able to get their money.

Bryan Armour, who is director of passive strategies research at Morningstar, said, “Managing a complex, private equity strategy like this could seriously burn their fast-moving user base.”

His concern is that many users of the platform tend to trade quickly and may not adjust well to money being locked up.

High risk appetite and expanding features

Vlad said retail traders are already familiar with taking risks and that many of them are aware that investments in early-stage private companies could go all the way down to zero.

He said users are “buying heavily” into AI-related themes and that he does not believe valuations of large tech giants are excessively inflated.

Vlad became widely recognized during the 2021 meme-stock cycle due to Robinhood’s popularity among highly active traders who were willing to take bold bets.

Shares of Robinhood have risen around 255 percent this year, making it one of the strongest performers in the S&P 500.

Despite that run, the stock fell almost 11 percent on Thursday after the company reported third-quarter revenue of $1.27 billion, which was double what it reported a year ago. Income from crypto trading increased sharply, rising 300 percent to $268 million.

Earlier this year, Robinhood partnered with Kalshi to offer prediction markets where users can trade on binary outcomes tied to sports, politics or entertainment.

The company reported that the number of event contracts traded on the platform ROSE to 2.3 billion between July and September, and then to 2.5 billion in October. Vlad said this type of market could expand further and become more personalized.

He said that if traders could price the risk of a house being damaged by a flood or fire, it could lead to a product that functions differently than traditional insurance and may appeal to many users.

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