According to Financial Times News, Robinhood CEO Vlad Tenev revealed plans to give amateur investors access to private AI companies through a new fund managed by Robinhood Ventures. The fund will hold a highly concentrated portfolio of five or more “best in class” private companies and may use borrowed money to boost returns. This comes as the number of private US companies valued over $1 billion exploded from 20 in 2016 to over 1,000 in 2024, with just 10 lossmaking AI companies adding nearly $1 trillion in value through private deals in the past year. Robinhood’s stock has been the S&P 500’s third-best performer this year, up 255%, even as shares fell 11% on Thursday despite reporting Q3 revenues doubled year-over-year to $1.27 billion. The company also saw crypto transaction revenues surge 300% to $268 million and prediction market contracts explode to 2.5 billion in October alone.
Democratizing Risk or Disaster?
Here’s the thing about “democratizing” private equity: it’s basically taking the riskiest part of investing and handing it to the people least equipped to handle it. Robinhood’s fund will be closed-end, meaning your money could get trapped if too many investors panic and rush for the exits. Morningstar’s Bryan Armour nailed it when he said managing this complex strategy “could seriously burn their fast-moving user base.” And let’s be real – Robinhood’s core audience are the same folks who brought us meme stocks and buying-the-dip mania. Now they’re being offered what amounts to venture capital exposure without the typical safeguards.
The AI Bubble Talk
Tenev pushes back hard against bubble concerns, saying Big Tech P/E ratios aren’t “crazy out of whack.” But come on – we’re talking about private companies that don’t have to disclose financials, where valuations are set in backroom deals rather than public market scrutiny. Just 10 lossmaking companies added $1 trillion in value? That should make anyone pause. The timing is suspicious too – this feels like Robinhood trying to catch the AI wave while it’s still cresting, regardless of what happens when it eventually breaks.
The Bigger Shift Happening
What’s really interesting here is the broader trend of private markets opening to retail investors. Trump’s executive order in August made it easier to include private assets in retirement plans, and giants like Blackstone and Apollo are now targeting individuals too. Public markets have been shrinking for decades while private companies multiply. Basically, Wall Street has figured out there’s a massive pool of untapped capital in Main Street’s pockets. Whether that’s good for Main Street is another question entirely.
Prediction Markets and Beyond
Robinhood’s ambitions don’t stop at AI investing. Their prediction market business with Kalshi is exploding – 2.5 billion event contracts in October alone. Tenev even floated the idea of pricing risks like houses flooding or burning, suggesting this could evolve into personalized insurance products. That’s either visionary or terrifying, depending on your perspective. The company is clearly betting that today’s retail traders want exposure to everything from basketball game outcomes to the next OpenAI – and they’re building the infrastructure to make it happen.
