What To Know About Investing In Private Companies: Ark Invest's New Fund

In September, Titan announced a new partnership with Cathie Wood's Ark Invest to provide access to the new Ark Venture Fund, a brand new, exclusive private equity fund for retail investors.

Private Investment Opportunities: The new Ark fund provides retail investors access to pre-IPO companies that have previously been restricted to institutional and wealthy individuals.

Ark joins Apollo Global Management APO and Carlyle Group Inc CG in partnering with Titan to offer retail investors new opportunities in crypto, private equity and much more. Ark has said its new ARK Venture Fund will invest between 20% and 85% of its assets in private companies.

“By offering Titan investors exclusive access to the ARK Venture Fund, we’re unlocking venture capitalism for most investors, another step in our mission to democratize investing,” said Clayton Gardner, Co-CEO & Co-founder of Titan.

Risks To Watch: Empire Financial Research editor-in-chief Sam Latter recently cautioned investors about investing in the Ark Venture Fund. 

He said 90% of startups ultimately fail, making private companies inherently more risky and volatile than public ones. 

Latter pointed out the Ark Venture Fund will charge a 2.75% management fee in addition to a total expense ratio of 4.22%.

"If Wood's new fund returns 10% per year, you're left with just 3.03% after paying nearly 7% in fees," Latter said.

Related Link: Titan Investors Can Now Access Private Equity Markets

Wood's Bold Claims: Wood rose to popularity when her bets on high-risk speculative investments generated some staggering short-term returns during the market's recovery from the COVID-19 sell-off in 2020.

Investors have dumped speculative assets in the last 12 months, and the Ark funds has been among the market's worst performers due to Wood's growth-oriented investing strategy.

Wood has famously made bold claims that Bitcoin BTC/USD prices would hit $1.36 million by 2030 and that Tesla TSLA will reach $1,800 per share by 2025.

Six months ago, Wood said she projects a 50% compound annual rate of return from Ark's flagship ARK Innovation ETF ARKK.

That projection is off to a bumpy start. In the last six months, the ARKK fund is down nearly 40%, and the entire collection of ARKK funds have lagged the S&P 500 so far in 2022.

What It Takes To Invest: The ARK Venture Fund is available to U.S. investors, including individuals, for a minimum initial investment of $500. ARK also plans to offer access to the venture fund to registered investment advisers, family offices, and institutional investors.

The venture fund will focus investments in early- to late-stage private companies along with publicly traded businesses similar to those held by ARK’s ETFs. The portfolio will have a targeted composition of 70% private companies and 30% public companies.

“By launching the ARK Venture Fund, we seek to augment venture capital, offering all investors access to what we believe are the most innovative companies throughout their private and public market life cycles,” Wood said.

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