This ARK Venture Fund review was last updated on 01/04/2022 to include the latest portfolio updates.
On September 27th, 2022, Cathie Wood of ARK Invest launched a new pre-IPO venture capital fund in exclusive partnership with Titan, an investing app.
It’s called the ARK Venture Fund, and it’s available to all U.S.-based retail investors for a $500 minimum investment.
The ARK Venture Fund is a new asset class for retail investors.
It enables retail investors to own high-quality pre-IPO companies, potentially years before they go public or get acquired.
Pre-IPO investing platforms already exist.
However, existing platforms require the investor to be accredited (invested assets > $1 million, or income > $200k single, $300k married) and a $10,000 minimum investment.
The ARK Venture Fund at Titan is a portfolio of pre-IPO and public companies, giving you immediate diversification across several innovative disruptors in various stages of growth.
Best of all, the $500 minimum makes it accessible to nearly all U.S.-based investors.
Before we get too excited, there’s a lot to unpack in this ARK Venture Fund review. There are unique risks to startup investing, and there may be some growing pains standing up the fund.
The fees are also more significant than a typical stock, bond, or real estate fund. However, ARK Invest claims the fees are lower than what wealthy people pay investing in traditional venture capital investment funds, with greater liquidity.
Liquidity is limited to quarterly, but it’s better than no liquidity at all.
The ARK Venture Fund made its first investments in September 2022, buying both private and public innovative companies.
Learn which pre-IPO companies you can own via the fund below.
Acknowledging the risks, this fund represents a new era of venture capital.
In light of the lousy IPO market conditions, the ARK Venture Fund at Titan is an opportunity for investors to own future IPO companies — today.
ARK Venture Fund Review
The ARK Venture Fund is a unique, first-to-market product similar to only one other fund we’ve seen.
That makes the ARK Venture Fund via Titan the first of its kind to be available to all U.S.-based investors.
The fund philosophy is three-fold:
- Eligibility for all U.S. Investors — Broad access for retail investors. Available in taxable or IRA accounts.
- Cost-Effective Alternative — Lower fees compared to traditional venture capital access
- Liquidity For An Illiquid Asset Class — Better liquidity than conventional venture capital
As you read through this ARK Venture Fund review, you’ll find the fees are high, and liquidity is limited compared to most retail investment options (ETFs, stocks, mutual funds, etc.).
However, compared to the traditional venture capital world, which isn’t accessible to retail investors, the opportunity stands up quite well.
Considering this is a new asset class previously unavailable to retail investors, fees and restrictions should be expected for the privilege to invest in pre-IPO companies.
As more companies offer this kind of product, and as assets under management increase, fees will hopefully fall over time.
Full Disclosure: The author has opened a Titan account and invested $1,000 into the ARK Venture Fund. See screenshots of the account below. Access IPOs is a Titan affiliate partner. This website may be compensated if you sign up and fund an account using links in this review.
Who is Cathie Wood and ARK Invest?
Cathie Wood is the Founder, CEO, and CIO of ARK Invest. She is best known for creating multiple actively managed exchange-traded funds (ETFs) that invest in innovative companies. The largest ETF is the ARK Innovation Fund (ARKK).
Bloomberg named Wood the best stock-picker of the year in 2020. She’s a closely-followed institutional investor on CNBC.
What is Titan Invest?
Titan Invest is a modern investing platform that offers hedge fund-like investment products to retail investors. It’s a mobile-first platform, but also available via desktop.
It offers stock, real estate, private credit, cryptocurrency, and now — venture capital pre-IPO investments.
Venture capital access is the outlier product here, so this ARK Venture Fund review will primarily focus on this Titan product.
[With Titan] ARK is moving from social media and social marketing to social distribution. We are offering investors something they have not been able to access before. Cathie Wood, Founder, CEO, Chief Investment Officer
Titan says it is on a mission to democratize access to investment opportunities.
ARK Venture Fund Holdings Overview
The ARK Venture Fund is an investment opportunity available exclusively on the Titan platform. It holds pre-IPO and public companies with innovative and disruptive businesses.
The fund expects to invest 20% – 85% of its assets in securities of private companies and the remainder of its assets in publicly traded securities. That’s a wide range under what the fund calls “normal circumstances”.
This range will likely become refined as the fund matures. Market fluctuations and significant movements in individual stocks will also affect the investment allocation, especially over the first few months.
As of October 28th, 2022, the ARK Venture Fund holdings comprise six private companies and 12 public holdings.
When the fund is mature, management targets 25 or more private company holdings and between 15 and 30 public companies.
The private/public mix gives the fund flexibility because:
- Public/private market price disparity could mark opportunities
- Owning public shares helps the company allocate cash while lining up new private investments
- Publicly-traded companies are more liquid, providing liquidity to investors every quarter
- The fund can continue to own newly public companies after their IPOs, potentially maintaining long-standing positions
ARK Venture Fund Holdings — Pre-IPO Companies
By owning the ARK Venture Fund, investors can own a portion of the following private companies (as of November 14th, 2022):
- Twitter *
- Chipper Cash
- Epic Games (learn more)
- Flexport (learn more)
- Discord (learn more)
* Yes, Twitter. According to an email from Titan on November 1st, 2022:
The ARK Invest team has been able to secure a piece of the private Twitter deal for the ARK Venture Fund. Twitter marks the sixth private investment in the ARK Venture Fund. You’ve likely seen the news that Elon Musk just took the company private. The ARK Invest team was able to negotiate with Elon for a piece of the company for the ARK Venture Fund before delisting it.
ARK Venture Fund Holdings — Public Companies
By owning the ARK Venture Fund, investors can own a portion of the following public companies (as of December 31st, 2022):
- 10X Genomics (TXG)
- Beam Therapeutics
- Block (SQ)
- Coinbase (COIN)
- Crispr Therapeutics AG (CSPR)
- Draft Kings (DRFT)
- Exact Sciences (EXAS)
- Nvidia (NVDA)
- Prime Medicine (PRME)
- Roblox (RBLX)
- Roku (ROKU)
- Shopify (SHOP)
- Tesla (TSLA)
- Twilio (TWLO)
- UiPath (PATH)
- Unity (U)
- Zoom (ZM)
The portfolio also held approximately 37% in cash and cash equivalents as of writing.
What Happens if a Pre-IPO Company has an IPO?
The ARK Venture Fund owns both pre-IPO and public companies, allowing it to benefit from long-term growth cycles.
It can sell shares during IPOs and continue to hold stock after IPOs.
The fund’s structure allows it the flexibility to benefit from both private round valuation increases and post-IPO price pops.
Management will evaluate each IPO as they occur.
ARK Venture Fund Review: Fees
Fees for the actively-managed ARK Venture Fund are much higher than typical stock, bond, or real estate funds.
Venture capital investing requires deep professional networks and extra due diligence since private companies are not as scrutinized by the SEC.
ARK Invest provides this access and expertise.
Higher fees are expected in venture capital. ARK Invest is providing significant transparency to investors with full fee disclosure, explanations of why, and comparisons to conventional venture capital.
Read and understand the fees and justification before investing. Please note that the distribution and operating fees are current estimates and may vary higher or lower as the fund matures.
Here is a fee breakdown (as of October 2022):
- 2.75% — management fee
- 0.65% — in distribution fees
- 0.82% — in operating fees
- 0.00% — Titan platform fee
Add those together, and you get a 4.22% expense ratio.
The fund managers justify the fees by comparing it to a typical venture capital fund standard ”2 and 20” model (2% management fee, 20% carried interest).
In an example provided in a detailed fee whitepaper, the fund explains how the investor would retain approximately 40% in the ARK Venture Fund fee structure compared to the 2 and 20 pricing model.
As assets under management grow and more similar funds become available, I expect ARK Invest will be able to lower fees in the future.
Notably, Titan is not charging a platform fee to invest in the ARK Venture Fund, unlike its other funds, which charge $5 per month or 1% AUM above $10,000.
For comparison, the Fundrise Innovation Fund expense ratio is 2.97%.
ARK Venture Fund Liquidity
Investors can request redemptions quarterly during the following months:
Investors can redeem up to 5% of the fund’s total assets every quarter. If redemptions are low for a given quarter (cumulatively less than 5% of total assets), investors can likely expect to receive all or most of their withdrawal requests.
However, if cumulative redemption requests are over 5% of total fund assets, such as when market conditions become volatile, investors will receive a prorated amount of their requested redemption.
Funds like these require time to realize long-term gains. Therefore, only investors with at least a three-to-five-year investment horizon should consider investing.
ARK Venture Fund Prospectus
This ARK Venture Fund review is limited in scope. Investors should perform due diligence before investing.
ARK Venture Fund Tax Reporting
The ARK Venture Fund is a closed-end regulated mutual fund, meaning investors will receive a 1099-DIV during tax filing season for taxable distributions.
Can International Investors Own the ARK Venture Fund?
Venture capital investing involves unique risks to retail investors. Only invest in pre-IPO companies or funds with money you can afford to lose.
Pre-IPO companies are not subjected to the same scrutiny as public companies. Therefore, investor protections are limited.
Because of the limited oversight, only accredited investors can typically invest in pre-IPO companies.
However, technology and loosened regulations have opened up opportunities for innovative fintech platforms to provide broader access to investors.
The ARK Venture Fund is a regulated security, helping to reduce risk. But it’s still a new asset class for retail investors.
Private investments may experience significant volatility, affecting the ARK Venture Fund share price. Some pre-IPO startups may fail. Publicly traded holdings will experience market volatility.
Even though Titan Global Capital Management USA LLC is an investment adviser registered with the Securities and Exchange Commission, some platform risk is associated with joining Titan. The platform may not exist five years from now.
That said, Titan has raised at least $73 billion in venture capital funding from well-known investors, including Y Combinator, Andreessen Horowitz, General Catalyst, Kevin Durant, Odell Beckham Jr., Will Smith, and Jared Leto.
With its partnership with ARK Invest, the company leaps ahead of other aspiring platforms with an attractive offering to help investors further diversify.
My Titan Account
Upon learning about the ARK Venture Fund via Titan, I opened a Titan account and bought $1,000 worth of the fund.
The signup process was easy. I started the signup process on the web.
The sequence sent me a link to download the app and finish the process on my iPhone.
It took a few business days for my funds to transfer and the transaction to complete.
Here’s a view of my account from the phone app:
You can see the current value of my account. I invested on October 11th, 2022. The price updates daily.
The app also includes daily insights (“Three Things”), which also come via email.
Then there are plenty of opportunities to buy other assets in the app. Here are two views of the stock, crypto, real estate, and private credit funds available. Tap the plus sign to add an investment.
I have only invested in the ARK Venture Fund so far.
A few weeks after my purchase, I received this very real-looking handwritten note.
Private companies are waiting longer to conduct their IPOs.
Therefore, venture capital investors are reaping more benefits from early-stage growth companies.
But venture capital investing has traditionally been reserved for wealthy investors, excluding retail investors until after the IPO.
Though IPO access has improved, IPOs often happen when growth is slowing.
Prices may pop during the IPO, but we’ve seen dramatic price drops when valuations get out of control.
Retail investors suffer while venture capitalists use IPO proceeds to find the next early-stage gem.
Fintech platforms such as Titan are changing the game, empowering retail investors with the chance to benefit from late-stage private companies before the IPO arrives.
With the ARK Venture Fund, this is the first widespread opportunity to participate in the early gains of innovative late-stage startup companies, with less risk than equity crowdfunding.
Though it’s not a pure venture capital fund, it is a pure innovation fund. The risk/reward opportunity may reward investors whose investment objectives support increased risk.
Non-accredited investors waiting for the next round of IPOs, or who are not getting allocation from their online IPO brokers, can own a larger pool of companies and potentially profit indirectly when the next IPO wave hits.
Titan and the ARK Venture Fund are giving us access that only the wealthy had — until now.
Disclosure: The author is long the ARK Venture Fund via Titan. Long CSPR, RBLX, TSLA, ZM. Access IPOs is an affiliate partner with Titan. If readers use links to open an account with Titan and fund an account, Access IPOs may be compensated at no additional cost to the investor. Thank you for reading this Titan ARK Venture Fund review.