Cathie Wood’s Ark Invest has ventured into the private startup investment space with its Ark Venture Fund, a closed-end interval fund launched in 2022 that democratizes access to venture capital investments. The fund allows retail investors to participate with as little as $500, breaking down traditional barriers that typically limit venture capital to wealthy individuals and institutions.
Despite gathering a relatively modest $70 million in assets, the fund has secured investments in some of Silicon Valley’s most prominent AI startups. Notable holdings include OpenAI (maker of ChatGPT), xAI (Elon Musk’s artificial intelligence venture), and Figure (a Jeff Bezos-backed humanoid robotics startup). SpaceX, also founded by Musk, represents the fund’s largest holding at 13% of total assets, worth approximately $9 million.
In October, Ark invested at least $250 million into OpenAI’s latest funding round, which valued the AI startup at $157 billion. However, most of that investment came from a separate private venture fund reserved for high-net-worth investors. OpenAI comprises just 5% of the Ark Venture Fund’s portfolio, translating to less than $4 million invested.
Brett Winton, Ark’s chief futurist and architect of the venture strategy, explained the firm’s competitive advantages in winning deals with mature startups. Ark produces extensive original research demonstrating deep understanding of breakthrough technologies, offers relationships with potential customers across public and private markets, and provides long-term investment flexibility through its indefinite fund structure—unlike traditional venture funds with fixed lifespans.
The fund has delivered 36% returns since inception but is down 3% year-to-date, underperforming the S&P 500’s 26% gain this year. Ark charges a 2.75% management fee—high relative to other interval funds but without taking carried interest or profit shares typical of venture capital.
Winton acknowledged the fund needs to attract more investors to write larger checks, suggesting the fund could potentially grow to billions in assets. The venture represents Ark’s ambitious goal to “provide the best venture portfolio in the world to everyone in the world, not just to the rich and the famous.”
Key Quotes
Our goal here is to provide the best venture portfolio in the world to everyone in the world, not just to the rich and the famous
Brett Winton, Ark’s chief futurist and architect of the venture capital strategy, explained the democratizing mission behind the Ark Venture Fund, emphasizing the firm’s commitment to making elite AI and technology investments accessible to retail investors.
It means we can engage in really constructive conversations with them about their strategy
Winton described how Ark’s extensive original research on breakthrough technologies helps the firm win investment opportunities with AI startups, demonstrating deep understanding that appeals to founders of companies like OpenAI and xAI.
We would prefer to be able to write larger checks out of the venture fund than we currently can
Winton acknowledged the fund’s size limitations, with only $70 million in assets restricting its ability to make substantial investments in major AI funding rounds like OpenAI’s $157 billion valuation round.
If that happens, then that’ll actually become the story of Ark. Ark kind of changed venture capital
Winton expressed his vision for the fund’s potential impact, suggesting that if the venture fund grows to billions in assets, it could fundamentally transform how venture capital operates by opening AI startup investments to the masses.
Our Take
Ark’s venture into democratized AI investing represents an intriguing experiment at the intersection of retail finance and cutting-edge technology. While the mission is admirable, the execution reveals inherent tensions. The fund’s small size limits its influence and check-writing capacity, yet its access to premium AI deals like OpenAI and xAI suggests Cathie Wood’s brand still carries weight in Silicon Valley.
The 3% year-to-date decline versus the S&P 500’s 26% gain raises concerns about whether retail investors understand venture capital’s illiquidity and long time horizons. AI investments require patience—these companies may not provide returns for years or even decades. The 2.75% management fee is steep for underperformance, though the lack of carried interest provides some offset.
Ultimately, this fund tests whether AI’s transformative potential can be packaged for Main Street investors without the traditional venture capital gatekeeping. Success could reshape startup funding; failure might reinforce why venture capital has historically remained exclusive.
Why This Matters
This development represents a significant democratization of AI investment opportunities for retail investors who have traditionally been locked out of early-stage funding rounds in transformative AI companies. As artificial intelligence reshapes industries and creates unprecedented value, access to these investments has been restricted to venture capital firms and accredited investors.
Ark’s venture fund signals a broader trend of making AI startup investments accessible to everyday investors, potentially changing how innovation is funded. The fund’s focus on leading AI companies like OpenAI, xAI, and Figure demonstrates the central role artificial intelligence plays in the future of technology investing.
The fund’s structure—allowing indefinite holding periods and public-private market flexibility—could influence how AI startups think about their investor base and long-term capital strategy. For the AI industry, this means potentially more stable, patient capital from investors committed to long-term technological transformation rather than quick exits. However, the fund’s recent underperformance raises questions about whether retail investors can stomach the volatility and extended timelines inherent in venture capital, particularly in the rapidly evolving and competitive AI landscape.
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Source: https://www.businessinsider.com/ark-venture-fund-cathie-wood-ai-2024-10