You know what I love to do?
I love introducing you to high-potential startups, and showing you how to invest in them.
For example, I recently came across an AI startup with exploding revenues. Some of the biggest names in venture capital are already backing it. And now you can invest in it, too.
Furthermore, you can invest through a publicly-traded fund. The minimum is just $25 or so. And all you need to do is click a button and you’re in.
So today I’ll explain everything…
Including why you shouldn’t invest a dime in it.
Meet Devin, the AI Software Engineer
Last week, Robinhood Ventures Fund I — a publicly-traded venture-capital fund with the ticker RVI — announced a new investment in a startup called Cognition.
(I introduced you to RVI here, last February)
Cognition is the AI company behind Devin, an agent that can do software engineering autonomously. In other words, instead of just suggesting lines of code, Devin can actually plan projects, write code, test it, and ship production software.
It’s magic. And this opportunity is enormous. Crazy big. This is the future of software.
Cognition is gaining traction fast. In September, it reported an annualized revenue run rate approaching $900 million, up from $492 million in May.
Its latest funding round valued it at $48 billion. That’s the round Robinhood invested in, alongside top VCs including Andreessen Horowitz, Accel, and Founders Fund.
Furthermore, Cognition isn't the only AI heavyweight in Robinhood's portfolio. It also invested $75 million in OpenAI earlier this year. So far, so good, right?
But here's where things fall apart.
A Great Startup Doesn't Equal a Great Investment
RVI started trading in March at $25 per share.
Investors were excited. Finally, they could buy into a fund that held hot private startups.
The excitement sent RVI up like a rocket. In May, shares reached $77.39 — more than three times the offering price. But then reality set in.
By October 22, RVI had fallen to $23.84, below its $25 IPO price.
Here’s its current chart:
This is exactly what I warned you about in February…
As I explained, RVI is a closed-end fund. That means, even though the fund holds private investments that don’t trade, investors can buy and sell shares of RVI like a stock.
Here's the catch: The market price of a closed-end fund can diverge dramatically from the value of its underlying assets (its “net asset value,” or NAV).
When enthusiasm runs wild, investors pay more than those assets are worth. When enthusiasm fades, the premium disappears — even if the underlying startups are doing great.
As I wrote in my original warning:
Excitement might drive RVI’s share price far above its net asset value — only for gravity to eventually take over.
And that’s exactly what happened.
The Bottom Line
Cognition could become a major winner in AI. And Robinhood deserves credit for bringing another intriguing private company into the public-market spotlight.
But that doesn't make RVI a smart buy.
Remember: You can pick a winning company — and still lose money if you buy it through the wrong type of investment.
To get the right kind of exposure to private-market opportunities, you need to focus on the underlying businesses and the terms of the investment.
That's how we approach investing at Crowdability.
Happy investing,
