Vlad, Shiv, it's great to be here today. You guys know me, but for those watching at home, Brad Gerstner. I'm the founder and CEO of Altimeter Capital. One of the mutual passions I know we share is the democratization of finance. I'm excited today to talk about Robinhood Ventures. So, why don't we start with you, Vlad, tell me a little bit about your passion and the vision for the democratization of finance and how Robinhood Ventures fits in.
Yeah, I'll get right into it. In my opinion, what we have with private markets is the greatest inequity in capital markets today. Over the past few decades, companies are staying private for longer. Now you're in a situation where the biggest private companies are in valuations in the hundreds of billions. They might not go public until they get into the trillions. We share a passion that we have the greatest engine of innovation in the world and more people need to share in that earlier. So Shiv, tell us a little bit about what exactly Robinhood Ventures is doing and how does that fulfill this vision or this mission about getting more people in the game earlier.
Yeah, absolutely. So Vladimir had been brainstorming literally for years on how to make this happen. And when you talk to customers, which is how we always start, there's three things they want. First, they want daily liquidity. They have liquidity needs, that's what they're used to. Second, they don't want to be accredited. 80 to 85% of Americans are not accredited today. So, they feel like they're being left out.
Can you say just a bookmark that what is it? What is accredited and what do you mean by that?
Yeah, accredited is an SEC regulation which says if you want to invest in assets that are deemed more speculative, more risky, you need to be what's known as an accredited investor. And typically, it's measured by how much wealth you have. And so, what ends up happening is those that have wealth are able to invest in some of these assets and those people that don't have wealth aren't. So, you're further left behind. And so you see that over and over again in private assets.
It's just a gating factor preventing people from even if they were being offered a deal, from participating.
Exactly. And the third thing they really want is they want to invest in the best-in-class technology companies they know and love in a concentrated portfolio. They don't want an S&P 500 of every technology company. They want the companies that they know that are out there that are changing the world. And so we designed our product to serve all of those needs to make sure it had daily liquidity, that you don't need to be accredited, and that you can have a portfolio of the companies that you want to use. So that's the vision and super excited to bring it to market.
So Vlad, it sounds like something pretty innovative, right? And what I heard Shiv say is this might be able to give investors access to companies they've heard of but they can't invest in today in the public markets. Is that what we're talking about here? Is that the investment approach that you guys are pursuing at Robinhood Ventures?
Essentially, we're creating a closed-end fund, a 40 Act fund that will have no carry and we're going out there. Shiv and I have been banging down doors. Shiv has been free soloing the rosewood at Sand Hill and getting into deals and doing that for the benefit of retail customers so that they could get skin in the game for some of the world's most transformative companies. And we talk about accreditation but it's not just accreditation. There's lots of accredited investors that are just trying to get into these deals and they're not getting into these deals. They're hyper competitive. They're sort of passed around into a network of insiders. I mean, we know how this works.
Yeah, I think Robinhood is a little bit unique because we're not a typical finance company. We're here in Silicon Valley. It's not so long since we've been private and we still have our relationships with venture capitalists and we can drive up and down Sand Hill Road and do these deals, but we also have a huge retail presence, 27 million customers in the US, right?
So if we rewind the clock a little bit, I am one of those Sand Hill Road venture capitalists who invest in these early stage companies and later stage companies. Risk capital, this venture capital is so important to the growth of the United States of America. It's so important to our economic vibrancy. What we have here in Silicon Valley is so special. We have risk takers who want to build rockets that are falling out of the sky with Elon. They want to build AI that's going to modernize technology and put us on the forefront around the world and they're risk capital that flows into those things. And what you're saying is because these companies are staying private longer, this is a way for the average retail investor to share in what you're already doing here in Silicon Valley. So Shiv, talk to me a little bit about that. There's already an ecosystem of venture capitalists like us. We're leading what we call the Series A or the Series B or the Series C round, these earlier stages of financing. So how do you interact with that ecosystem here in Silicon Valley to make sure the retail investors that you guys want to sell to are getting into these and that you're getting allocation?
Yeah, absolutely. When we think about it, it's a marketplace. On one side, you need to have the retail demand. That's what we know and love. We have 27 million customers, nearly 350 billion of assets. And the second part is the companies and the supply. These companies can take capital from yourself or any of the best VCs in the world. So, we have to prove to them why we're different. We're the new kid on the block. And there's a couple things that we bring. First, especially if you're a consumer company, but even if you're not, just being associated with retail. Second, the vehicle that we're using and having retail invest in is a permanent capital vehicle. What that means is we can invest in the round now, we can invest in their IPO and we can hold them when they're public, right? So for your company, it's fantastic. You have a great retail brand and you have permanent capital. So we're really just trying to match the marketplace together. And we set out to do this. We said, why do we have the right to win? And as Vlad said, we're a technology company that has to be in financial services. We have deep roots in Silicon Valley. We've called you many times for advice for how can we invest and get to know these companies. And the great thing is it's resonating. Companies are learning. They want to do this.
That was the point I was going to ask you, which is, okay, you guys have a seed portfolio. You've talked to a lot of companies. You're really well known in Silicon Valley. You're out there talking to the CEOs. How is it going? What are the types of companies you're getting access to?
I think so far we've exceeded our expectations. I mean, I think typically what you hear from investors is that the first fund you have you kind of have to prove yourself. You have to prove your value both to LPs and to the companies. So our LPs are in effect retail investors. So that part I think we've built up over a decade plus. But to the companies, I think there are a lot of people out there that see tremendous value and see this as a differentiated offering.
So we were actually, and Shiv can go through all of them, we were surprised actually at how these companies wanted to be involved.
And when you do a deal in this fund, will the investors in this closed-end fund, will they know that you're doing a deal? Will they know the name of the deal? Will you provide information to them about the deal or do they go do that research on their own?
We make the investments. We underwrite the information. We try to share as much information as possible with the investor so they understand. And so what they will see is some basic information, the date of the investment, the size of the investment, the price. And then the other thing we're doing that is a little bit innovative is for the companies that are private, we're trying to aggregate public market data and show it in a really simple, clean Robinhood way. For example, when was your last fundraising round, who are your former investors. As an Altimeter investor in the fund, you take that for granted because you and your team can go online and find that, but average retail doesn't have access to that. So we're really going to lean into the education using public market data and aggregate in a really simple way. And then every time we make a new investment, customers will know and be able to see it. If you look at what's on file today, our seed portfolio is already in there. You can see all the companies. So I'll give you some examples. Databricks, we invested in their past two rounds. We talked about AI. This is a company that's at the forefront of it. Razorpay, data tagging, Airwallex, payments company. It's global. It's coming to the US. Oura, the hardware company. They're doing a really hard mix of software and hardware. Revolut, another global fintech company. And soon to be in the portfolio, Stripe, that we've made a recent investment in.
We wore those guys down, Brad. We wore those guys down. They're big fans of you guys, I know. So you just listed a lot of different companies.
One of the questions I get a lot from our investors, right, because Altimeter goes out and raises money from some of the most sophisticated pension funds and endowments and others in the world. They say, 'Brad, Silicon Valley seems to go through these peaks and valleys and right now it seems like everybody's crazy for AI and the valuations.' So, how do you communicate with your investors just like with everyday stocks in the stock market that things can go up and things can go down? Just talk a little bit how you share, how you educate them about the risk associated with it. It's called venture capital for a reason because it's risky.
Yeah, for sure. I'm happy to start. And I know Vlad's thought a lot about this as well, but the first thing is education. So we spent a lot of time making sure it was really easy to understand what's in the portfolio. How does it look like? What are the companies? So you can track it, use it. The other thing is in a closed-end fund, it has a net asset value. So what are the assets worth? But it could trade at a premium or a discount. So we spend a lot of time to make sure customers understand what is that premium, what does it look like historically, where is it moving.
Will it show that in the app?
It will. You can see what the NAV is and you can see if there's a premium to discount. So really leaning into education. If you go through the prospectus, we put a lot of information on these are the type of companies, these are frontier technology companies, but we also put the risks. To your point, this is a risky venture. We want customers to understand it but we don't want to be paternalistic. If you want access to it, that's what we stand for. So that's a little bit how we're thinking about it. In terms of where we're investing, what we hear from customers is they want frontier technology companies, the things that are pushing the boundaries. And so similar to what you do, we underwrite everything.
