Robinhood Targets Bigger Role in Bringing IPOs to Retail Investors

Robinhood CEO Vlad Tenev says the company’s securities business can now serve as an underwriter.

Tenev’s announcement on X was flagged in a report Tuesday (June 9) from Seeking Alpha, which notes Robinhood’s expansion from trading platform to underwriter for initial public offerings (IPOs) could unlock higher-fee revenue streams and strengthen its position in capital markets.

Robinhood in 2021 launched IPO Access, a tool designed to give “everyday investors” an opportunity to buy shares of companies at their listing price. As PYMNTS wrote at the time, this is a privilege typically reserved for wealthy or institutional investors.

Since then, the report notes, retail participation in IPOs has moved from an afterthought to a central allocation strategy, shifting the question from “why allocate to retail at all” to “how big can the allocation be.”

Tenev, who is also Robinhood’s co-founder, added that becoming an underwriter, rather than simply a selling group member, is a natural step to better serve customers and issuers.

Seeking Alpha pointed out that Robinhood recently removed its PDT restrictions, doing away with the $25,000 minimum and pattern day trading flags, broadening access for retail traders.

Tenev announced last month that Robinhood’s first fund designed to expand retail investors’ access to private markets had attracted 150,000 retail investors.

In a speech at The Wall Street Journal’s Future of Everything event, Tenev said the company took its Ventures Fund I public as a public closed-end fund listed on the New York Stock Exchange.

“You can think of it as like a publicly traded venture capital firm with daily liquidity, no accreditation requirements, and no carry — so just a competitive management fee, no carry,” he said, adding that the fund includes “frontier companies” such as OpenAI, Databricks and Stripe.

Robinhood launched the fund because there are private companies raising capital at valuations in the high hundreds of billions, and there are likely to be multiple companies getting into the trillions, before an initial public offering (IPO) that permits retail investors to participate.

“It’s also just the beginning,” Tenev said. “The aspiration is, if you’re a company raising a seed round and a Series A round, so just first capital, retail should be a big chunk of that round, much like it now is in the public markets, and we should let those people in at the ground floor so that they can actually benefit from this potential appreciation that’s increasingly happening in the private markets.”