Fundrise CEO Ben Miller: It’s time to democratize access to private tech companies like OpenAI

The Democratization of AI Investment

“It’s time to democratize access to private tech companies like OpenAI.” This statement, delivered by Ben Miller, Co-Founder and CEO of Fundrise, encapsulates the core thesis of his appearance on CNBC’s “Squawk on the Street.” Miller spoke with CNBC anchors about the burgeoning trend of private markets and Fundrise’s innovative approach to providing broader access to high-growth technology companies. The discussion highlighted the significant shift in the investment landscape, where previously inaccessible opportunities are now being opened to a wider range of investors.

Miller articulated Fundrise’s mission to break down traditional barriers to entry in venture capital. He explained that his firm went to the SEC to find a way to enable broader investment in these lucrative private tech companies. “We figured out a new way to do it,” Miller stated, detailing the creation of a venture fund regulated by the SEC. This structure allows individuals to invest in a portfolio of private companies, including prominent AI innovators like OpenAI, Anthropic, and others, with a remarkably low minimum investment. This democratization of access is a pivotal development for retail investors seeking exposure to the cutting edge of technological advancement.

A key insight from the interview is Fundrise’s novel approach to venture capital. Unlike traditional venture capital firms that cater to institutional and accredited investors, Fundrise has pioneered a model that is accessible to the general public. Miller emphasized this by stating, “We figured out a new way to do it. We actually went to the SEC and said we need to democratize investing into these tech companies. We figured out a new way to do it, which is to create a venture fund that’s regulated by the SEC.” This regulatory framework is crucial, as it allows the fund to invest in privately held companies and report its performance publicly, offering transparency and a level of oversight not typically found in the private equity space.

The growth of private markets has been undeniable, and Fundrise is at the forefront of enabling wider participation. The recent acquisitions of private marketplace equity firms like Morgan Stanley, Charles Schwab, EquityZen, and Forge Global underscore the increasing interest and activity in this sector. Miller pointed out that this trend is not just about accessibility but also about the underlying value creation. He highlighted the Fundrise Innovation Fund’s performance, noting a “44.7% net-of-fees return in the past 12 months” and a valuation of approximately $400 million for the fund itself. This demonstrates that the firm’s model is not only inclusive but also effective in generating significant returns.

Miller also addressed the perceived risks in private markets, particularly concerning the valuation of companies and the timing of their public offerings. When asked about the potential for AI companies to be in a “bubble,” Miller countered, “I don’t think it’s so clear. I think the most important thing in investing is to look at supply and demand right now.” He elaborated that the current environment is characterized by high demand for AI products and a constrained supply of the necessary infrastructure, such as data centers. This imbalance suggests that the growth in AI is driven by fundamental demand rather than speculative excess.

The conversation then turned to the longevity of private companies and the potential for extended periods of private operation. Miller observed that companies used to go public much sooner, often after only five years. However, he noted a significant shift: “Now, they’re going public after 14 years. There are reasons that that’s the case. It has nothing to do with us. It’s the nature of the public markets.” He further elaborated that companies are choosing to remain private longer because the public markets are not as rewarding for growth companies as they once were, and the regulatory burden can be substantial. This, in turn, creates a need for platforms like Fundrise that can bridge the gap for investors.

Regarding the specific investment strategy for the Fundrise Innovation Fund, Miller mentioned that their average investment is around $10,000, with investors often in their mid-thirties. This demographic is actively seeking to invest in burgeoning sectors like AI. Fundrise’s approach is designed to be accessible, with no commissions or upfront transaction costs, making it an attractive option for a broad spectrum of investors. “Any American, with a $10 minimum, so you know, you’re 18 years old, you can invest, you’re 75 years old, you can invest. It’s so democratized,” Miller emphasized, underscoring the firm’s commitment to financial inclusion.

The underlying message is that the current market dynamics necessitate a re-evaluation of how individuals can participate in the growth of transformative technologies. By offering a regulated, accessible platform for investing in private AI companies, Fundrise is not only tapping into a significant market opportunity but also addressing a critical need for broader financial participation in the innovation economy. The success of their model, evidenced by strong returns and significant investor uptake, suggests a paradigm shift in venture capital accessibility.