ARK’s Cathie Wood weighs in on venture capital and her plans to launch a crossover fund

June 9, 2022, 12:30 PM UTC

Venture capitalists may be predicting trouble ahead for the private markets—but Cathie Wood has always danced to the beat of her own drum.

The chief executive of ARK Invest, the asset manager known for its bold—and risky—bets on tech and innovation, said yesterday afternoon that ARK is planning to launch a fund that will invest across both public and private markets. Right now, ARK’s funds invest solely in public equities.

“We’re going to start a crossover fund,” Wood said in an on-stage interview at the UP.Summit, a mobility conference taking place in Bentonville, Ark. this week. Wood declined to speak further about the fund because of Securities and Exchange Commission regulation, but an SEC filing from earlier this year reveals it will be a closed-end fund that will invest in public equities, early to late-stage startups, and venture capital funds, among other investments.

While ARK may be known for its ETFs, whose performance soared to remarkable heights during the pandemic, Wood isn’t new to the world of private investing. She is personally a limited partner in UP.Partners, a $230 million early-stage venture capital fund focused on mobility, whose partners are co-hosting the Summit in Bentonville.

But while it may not be an entirely new rodeo for Wood, it’s still a rather challenging time to debut a crossover fund. Hedge funds like D1 Capital Partners or Tiger Global that straddle both public and private investments have reported billions in losses this year as public tech stocks plunge, and Wood’s publicly traded funds have tumbled, with its flagship ARK Innovation ETF trading more than 50% lower than it was in January. 

With the path to an IPO largely closed for the moment, and some of the industry’s tech darlings starting to cut their valuations, asset managers like Fidelity are proactively trimming the value of their own positions and players like T. Rowe Price are rolling back their pace of deals. Some growth equity investors are turning focus to earlier-stage investments or companies most poised for profitability.

Wood made her name taking early—and sizable—bets on Tesla and, more recently, cryptocurrencies like Bitcoin. She likens ARK’s approach to the public markets to venture investing: “We are the closest thing you’ll find to venture capital funds in the public equity markets,” she says. But she’s also critical of how VCs are moving their money in the space. Wood mentioned that, at a former UP.Summit in 2018, venture capitalists repeatedly got up on stage complaining of high costs and said “oh, we would never invest in this.”

“There is a lot of capital moving into the asset-light part of the business,” Wood says, but she says that funds are still avoiding investments in companies that are spending a lot on the hardware or underlying technology. “We think that will change,” she says.

And she knows just the fund manager with the guts to do it. 

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
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- CapitalG, the San Francisco-based growth fund of Google parent company Alphabet, hired Melissa Sobel as communications partner and Stanley Onyimba as vice president of growth. Formerly, Sobel led a VC-focused communications consultancy and Onyimba was with Google Search.

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