Robinhood gets into venture capital
Robinhood drew plenty of attention — and criticism — this summer when it announced a service that uses crypto to give customers in the European Union a piece of high-flying start-ups like OpenAI.
Now the trading platform is doubling down on that commitment to widen access to privately held companies in the U.S.: It plans to unveil a new publicly traded fund that will invest in a collection of start-ups, giving ordinary shareholders entry into the world of venture capital. DealBook has a sneak peak at the project.
Meet Robinhood Ventures Fund I, a closed-end fund that Robinhood is registering with the S.E.C. that will trade on the New York Stock Exchange. It will invest in a “concentrated portfolio” of what it called leading start-ups across several sectors. The plan is subject to S.E.C. approval.
Opening up private markets has become big business, as Wall Street firms pitch products linked to markets once available only to big institutions and wealthy investors. Robinhood pointed to two longstanding trends: a sharp drop-off in the number of publicly traded companies in the U.S. and the exploding growth in the value of privately held start-ups. Consider that OpenAI’s valuation jumped from $157 billion last fall to $500 billion last month.
“For decades, wealthy people and institutions have invested in private companies while retail investors have been unfairly locked out,” Vlad Tenev, Robinhood’s chairman and C.E.O., said about the new fund. “With Robinhood Ventures, everyday people will be able to invest in opportunities once reserved for the elite.”
The venture fund comes after the brokerage began offering stock tokens, crypto-based assets that are linked to company securities, in the E.U. (It now offers tokens linked to more than 200 companies.)
What got investors’ — and regulators’ — attention was when Robinhood gave away $1.5 million worth of tokens it said were linked to OpenAI and SpaceX, which aren’t publicly traded.
The token project faced pushback. OpenAI declared that it wasn’t involved in the Robinhood product. Tenev later conceded that its OpenAI tokens weren’t “technically an equity instrument,” and Robinhood said that they were linked to its ownership stake in a special purpose vehicle.
A spokesman at Lithuania’s central bank, which is Robinhood’s lead regulator in the E.U., told DealBook it was seeking clarification from the company over the OpenAI and SpaceX tokens.
Critics worry about exposing ordinary investors to much riskier assets. Real estate funds pitched to individual investors, including those run by Blackstone and Starwood, have taken big hits in recent years.
Giving Main Street investors the chance to get into the inherently volatile venture capital business could raise new concerns.
HERE’S WHAT’S HAPPENING
The U.S. and China meet on Monday for a second day of trade talks. This round is again headed by Treasury Secretary Scott Bessent and the Chinese vice premier, He Lifeng, with a November tariff-truce deadline and TikTok on the agenda. This weekend, Beijing opened an investigation into the U.S. over chips dumping. Elsewhere, Brazil’s president, Luiz Inácio Lula da Silva, pushed back against President Trump’s tariffs on his country as “not only misguided but illogical,” while U.K. businesses are finding that their 10 percent tariff agreement may not be the great deal it once seemed.
China’s economic slowdown worsens. Beijing reported disappointing economic data on Monday including worse-than-expected retail sales and industrial output that grew by the slowest rate in a year. China’s troubled real estate market also plunged further, but investors don’t appear too worried: China’s C.S.I. 300 stock index rose.
Trump weighs in on interest rates. The president said he expected a “big cut” from the Fed at its meeting Wednesday, when it is widely expected to lower borrowing costs — but by a quarter point. The White House also renewed its push to fire Lisa Cook, the Fed governor, over accusations of mortgage fraud, filing an appeal in federal court on Sunday arguing that Cook’s arguments for staying on the job were without merit as it tries to exert more control over the rates-setting body. On that note, the Senate votes on Monday on the confirmation of Stephen Miran, Trump’s pick as a temporary Fed governor.
What’s not in Hochul’s Mamdani endorsement
Gov. Kathy Hochul of New York broke her silence on the New York City mayoral race on Sunday, endorsing Zohran Mamdani.
In a Times Opinion guest essay, Hochul wrote that she has emphasized to Mamdani, whose economic views have spooked many of the city’s corporate leaders, that Job One is “keeping and attracting businesses so that New York remains the center of the global economy.”
But her endorsement leaves several questions, including where she stands on Mamdani’s more controversial ideas, including a wealth tax, Vivienne Walt reports.
If elected, Mamdani would need the political support of Hochul to approve his tax plan, which would include raising city income tax by two percentage points on those earning $1 million. He has said that would raise $4 billion a year and help finance free buses and universal child care.
Mamdani’s ideas closely align with those of Gabriel Zucman, an economist at the Paris School of Economics and the University of California at Berkeley. His plan to tax the richest in France — called the “Zucman tax” — has ignited a similar outcry among corporate leaders there, too.
Zucman’s ideas have been embraced in the U.S. by the likes of Senator Elizabeth Warren and Senator Bernie Sanders. And snippets of such wealth taxes appeared in the presidential campaign platforms of Joe Biden and Kamala Harris.
Wealth taxes have been attacked on both sides of the Atlantic. Critics, including business leaders across the political spectrum, say that such targeted taxes would drive away wealthy taxpayers, starving governments of crucial funds. Hochul herself rejected Mamdani’s proposal in June, saying, “I don’t want to lose any more people to Palm Beach.”
But some analysts say those threats are overblown. About 2.5 percent of wealthy Americans move every year to other tax jurisdictions, compared with about 5 percent of low-income taxpayers, according to Cristobal Young, an associate professor of sociology at Cornell who studied I.R.S. data.
Zucman said that Mamdani’s plan amounted to an income tax of 2 percent. “That’s really not a lot of money for people who have businesses and families and networks and various interests in New York,” he said.
In any case, a wealth tax in New York probably remains a long shot. But Zucman told DealBook that the political winds are beginning to turn. “The odds are good even if the timing is uncertain,” he said, adding, “People see that everyone pays a lot of tax, with one exception: ultra-high-wealth individuals.”
But Hochul is running for re-election next year, and didn’t mention the issue in her endorsement.
Global view
Widening Gulf
Arab and Islamic leaders will hold an emergency summit on Monday in Qatar. Atop the agenda is Israeli’s deadly airstrike last week on Hamas leaders meeting in the capital, Doha. The question of whether the White House had foreknowledge of the attack — or gave tacit approval — has roiled the region.
The response is being closely watched by investors in the oil and cash-rich Middle East and beyond.
It comes on the fifth anniversary of the first signing of the Abraham accords. Those diplomatic and trade agreements, reached in President Trump’s first term, have generated solid and growing trade between Israel and the United Arab Emirates, Bahrain, and Morocco.
With the region on edge, some commentators fear that the bonhomie between Gulf leaders, Washington and Israel looks shaky:
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“The promise of American protection lies in ruins,” Soumaya Ghannoushi, an analyst, wrote in the London-based Middle East Eye last week. “For decades, Gulf rulers believed oil, bases and investments could buy security.”
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The attacks have thrown into question the U.S.’s relationship with Gulf States, including its military base in Qatar, Faisal J. Abbas, editor of the Saudi paper Arab News, wrote in an opinion piece for Semafor on Friday. “If American military presence no longer guarantees protection, and if its diplomatic assurances can be so easily undermined,” he wrote, “then what is the value of the military presence?”
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James Dorsey, senior fellow on the Middle East at the S. Rajaratnam School of International Studies in Singapore, told China’s Global Television Network on Sunday that regional leaders could shift some of their military spending to Europe or China: “There is no doubt a question mark in the minds of Gulf leaders regarding the reliability of the U.S. as a security partner.”
Are the accords at risk? U.A.E. leaders, who warned Prime Minister Benjamin Netanyahu of Israel earlier this month that his plans to annex the West Bank would destroy the Abraham accords, expressed outrage over last week’s attack.
Even The Jerusalem Post, a center-right publication, warned on Monday that the Netanyahu government’s actions were risking the country’s status and power abroad. “Unless Jerusalem is prepared to embrace pariah status — with all the economic, cultural, and security consequences that entails — it must pivot now,” the paper’s editorial board wrote. The Qatar attack, it said, “came at a fierce diplomatic cost that may not be restored.”
THE SPEED READ
Deals
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Elon Musk bought $1 billion worth of Tesla shares on Friday, according to a new regulatory filing. (Bloomberg)
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Brookfield Asset Management is said to be in talks to buy Yes! Communities, a U.S. landlord, from the Singaporean sovereign wealth fund G.I.C. for more than $10 billion. (FT)
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UBS is reportedly weighing a move to the U.S. from Switzerland to avoid potentially steep new increases in capital requirements in its longtime home country. (NY Post)
Politics, policy and regulation
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Steve Witkoff, President Trump’s special envoy for peace missions, disclosed that he had sold a $120 million stake in his real estate firm to address potential conflicts of interest (Bloomberg)
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“UnitedHealth Is Spending Big on Trump Allies to Fix Its Washington Problems” (WSJ)
Best of the rest
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“Toxic Fumes Are Leaking Into Airplanes, Sickening Crews and Passengers” (WSJ)
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Warner Bros. Discovery (“The Pitt”), Apple (“The Studio” and “Severance”) and Netflix (“Adolescence”) were among the big winners at last night’s Emmy Awards. (NYT)
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Mark Casey of the Capital Group says his investment approach is “very informed by Warren Buffett.” So why is he plowing billions into crypto? (WSJ)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
The post Robinhood Bets Again on Opening Up Private Markets appeared first on New York Times.
