Robinhood has announced a new financial instrument, Robinhood Venture Fund II (RVII), which is expected to become a publicly traded fund on August 13. The fund will have an opening price of $25 per share.
RVII intends to raise as much as $200 million, according to Reuters, with the aim of investing in startups founded by current and former Y Combinator participants, provided these startups agree to sell their shares. While retail investors can purchase shares in the fund, they will not directly hold shares in the individual startups.
The fund plans to pay a Robinhood-owned entity 2% of the net returns as a management fee, along with additional fees, bringing the total to just over 4%. This unit will also receive 20% "carried interest" from the resulting returns if the fund makes money from Y Combinator company exits.
Unlike typical venture capital funds, RVII does not appear to have an end date for returning remaining profits to investors, nor does it promise regular cash profit distributions. Investors may largely rely on returns from the fund's rising stock price.
Robinhood Ventures Fund I (NYSE: RVI), which also invests in private companies, routinely trades above its IPO price of $21. However, RVI's stock has also seen fluctuations, peaking at over $56 in May before trading at around $28 per share.