Robinhood will list a new investment fund called Robinhood Venture Fund II (RVII) on August 13 at an expected opening price of $25 per share, aiming to raise up to $200 million from regular investors (TechCrunch). The fund plans to invest in startups founded by people who have gone through Y Combinator, a well-known program that gives early-stage companies seed money and mentorship (Robinhood Newsroom). Robinhood began accepting share requests from customers on August 3 (Robinhood Newsroom).

Normally, only large institutions and wealthy individuals can invest in private startups before they go public. RVII is designed to change that by letting anyone with a brokerage account buy shares in a fund that holds those private-company stakes.

The structure is different from the crypto-based products Robinhood offered in 2025, when it sold what it described as tokenized shares of OpenAI and SpaceX. OpenAI condemned those tokens at the time, stating it was not involved and that the tokens did not represent any holdings in the company (TechCrunch). RVII, by contrast, buys real ownership stakes in the underlying startups.

People who buy RVII shares do not directly own a piece of those startups. They own shares in a fund, and that fund owns the startup stakes. Think of it like buying a share in a mutual fund that holds many stocks — you own the fund, not the individual companies directly.

The fees are where things get costly. A typical venture capital fund charges its investors what the industry calls "2-and-20": 2 percent of your money each year for management, plus 20 percent of the profits when the fund does well. RVII charges those same 2-and-20 fees to a Robinhood-owned entity, plus additional fees that bring the total annual cost to just over 4 percent (TechCrunch). The Robinhood unit managing the fund also collects 20 percent of the profits. In a normal VC fund, 2 percent and 20 percent of profits is the whole cost. Here, the layered fees push the total well above what most professional investors would accept.

Two other things are missing. RVII does not appear to have an end date for returning money to investors. Most venture funds run for about 10 years and then shut down, returning whatever is left to investors. RVII also does not appear to promise regular cash payouts (TechCrunch). For someone used to receiving dividends from stocks, this means the main way to get your money out may be selling your RVII shares on the open market.

Robinhood's first fund, Robinhood Venture Fund I (NYSE: RVI), gives a sense of how these can perform. RVI was created to buy shares in private companies including Databricks, Mercor, and OpenAI. It peaked above $56 in May and more recently traded around $28, against an initial price of $21 (TechCrunch). That swing shows how volatile a fund can be when its underlying investments are hard to value and hard to sell quickly.

In my view, the combination of no end date, no commitment to pay out cash regularly, fees above 4 percent, and a 20 percent cut of profits creates a setup where the fund's economics favor the manager over investors over long periods. A standard 10-year fund at least has a contractual finish line where money is returned and fees are settled. Without that, RVII investors are buying a permanent, high-cost wrapper around private shares whose value depends entirely on the manager's ability to pick winners and sell them at a good price, and on there being enough buyers for the fund's own shares.

The fund's success also depends on Y Combinator startups being willing to sell their shares to this vehicle, which is not guaranteed.

Robinhood's corporate structure spans multiple affiliated entities. U.S. brokerage services run through Robinhood Financial LLC, a registered broker-dealer and SIPC member. U.K. brokerage services operate through Robinhood U.K. Ltd, authorized by the FCA (FRN: 823590). U.S. cryptocurrency services are offered through Robinhood Crypto, LLC (NMLS ID 1702840), with EU crypto services through Robinhood Europe, UAB, registered in Lithuania. A self-custody wallet is offered through Robinhood Non-Custodial, Ltd, organized in the Cayman Islands. Spending accounts run through Robinhood Money, LLC (NMLS ID 1990968). Say Technologies, LLC handles shareholder engagement tools, and Sherwood Media, LLC produces financial news content. All of these entities are wholly-owned subsidiaries of Robinhood Markets, Inc. (Robinhood Newsroom.

This matters because the fees RVII pays go to a Robinhood-owned entity. The company managing the fund, the platform selling the shares, and the broker executing the trades are all under the same parent company. That is not unusual in structured financial products, but it does mean that Robinhood and RVII investors are not fully aligned — each layer in between has its own revenue interest.

On the positive side, RVII does open a door for regular people to invest in Y Combinator startups through a regulated, publicly traded fund, with real ownership stakes rather than crypto tokens. For investors who understand the costs and the limits on getting their money out, that is a real expansion of access. For those who do not, the structure carries costs and uncertainties that a standard venture fund agreement, for all its complexity, at least caps with a defined lifespan and a clear schedule for returning profits.