• Cathie Wood’s Ark Venture Fund allows retail investors to invest in high-growth startups.
• The fund’s net assets jumped to $69 million, about triple year over year.
• Despite its growth, the fund lags the S&P 500, raising questions about its returns.

Cathie Bois has attracted billions of dollars with its new approach to betting on tech stocks, combining bold calls to the future with the ability for investors to buy and sell in an instant.

Wood’s efforts to do something similar for venture capital have generated investments in many of Silicon Valley’s hottest deals. But its investors will have to wait much longer before seeing profits.

Wood’s company Ark Invest launched a new closed-end fund in 2022, allowing investors to invest as little as $500 in a vehicle that invests in private startups. Investors can buy and sell shares of the fund as they do stocks, with certain restrictions.

“Our goal here is to provide the world’s best venture capital portfolio to everyone, not just the rich and famous,” said Brett Winton, who works closely with Wood as chief futurist at Ark Invest and is one of the architects of the company’s venture capital strategy.

The fund, Ark Venture Fund, has now amassed nearly $70 million in assets, a far cry from venture capital giants like Sequoia and Andreessen Horowitz, or even Ark’s other funds. ARKK, Wood’s most famous fund, has $5.8 billion in assets, up from $50 billion.

Despite its small size, the fund has agreements to invest in Figurea startup supported by Jeff Bezos developing humanoid robots, xAIan artificial intelligence company founded by Elon Musk, and OpenAI, the creator of ChatGPT.

This raises the question of why aging startups SpaceX, Epic Games and Databricks, which have raised billions of dollars, are bothering to include Ark in new rounds. SpaceX is Ark Venture Fund’s largest holding, accounting for 13% of the fund’s total assets, worth approximately $9 million.

Winton said it was a topic he brought up frequently in early meetings with the founders.

First, Ark produces quantities of original research on areas of investment. Winton said this research helps the company win over teams because it demonstrates mastery of their breakthrough technologies. “It means we can engage in really constructive conversations with them about their strategy,” Winton said.

Second, because Ark invests in both the private and public markets, it offers relationships with potential clients of all business sizes.

Finally, unlike a traditional venture capital fund, which has a fixed lifespan to invest capital and return profits to the fund’s investors, Ark created its venture capital fund to continue indefinitely, allowing investors to enter and exit the fund periodically.

This provides the flexibility to own shares of companies after they go public, which can be particularly attractive to founders who are looking for investors with long-term outlooks and a greater tolerance for market volatility.

In October, Ark invested at least $250 million in OpenAI’s latest round, pushing the AI ​​startup’s valuation to $157 billion.

Most of that investment came from a related private venture capital fund restricted to wealthy investors. OpenAI represents only 5% of Ark Venture Fund’s portfolio, meaning it has invested less than $4 million.

“We would prefer to be able to write larger checks than we currently can with the venture fund,” Winton said.

To achieve this, the fund will need to attract more investors.

Although the fund is up 36% since its inception, it is down 3% year to date, according to the website. By comparison, the S&P 500 is up 26% this year, with tech stocks rising and Donald Trump’s electoral victory leading to records.

Ark Venture Fund charges a flat fee to invest the assets under its control, like a venture capital fund. The fee, 2.75%, is high compared to other interval funds, according to Morningstar, but it doesn’t take into account carried interest or profit share.

Winton said the fund could accumulate assets worth billions of dollars; in a follow-up call, he walked back his comment, saying it was unclear how big the fund could grow.

“If that happens, then it will become Ark history,” he said. “Ark kind of changed venture capital.”