ARK Venture (ARKVX) 2nd Quarter Update

By Charles Roberts, Chase Prather

Chief Investment Strategist

As Chief Investment Strategist, Charles is responsible for providing inputs into research and strategies on both public and private markets, with a particular focus on AI and multiomics. In addition, Charles plays a key role in the strategy and execution of ARK’s venture capital efforts. Charles joined ARK in 2023.

Venture Capital Research Associate

Chase joined ARK in November 2023. As a Venture Capital Research Associate, Chase supports the operations and research of the ARK Venture Fund, ARK's evergreen public-private crossover fund.

Dear ARK Venture Investors,

We’re thrilled to share exciting updates from the 2nd quarter, having made significant strides in democratizing access to top-tier venture investments without prejudice around accreditation status or investing experience. Our investment choices continue to target cutting-edge companies in artificial intelligence (AI), including Anthropic and Elon Musk's xAI, whose flagship model, Grok, has shown remarkable progress, particularly in image understanding. Our investment thesis highlights xAI's potential to leverage massive compute power and proprietary data to lead in the AI space. Additionally, we've bolstered our positions in SpaceX and entered positions in private companies like Boom Supersonic, Supersocial, and Firmly. For regular updates, subscribe to our Venture Fund updates here, or follow ARK Funds on X. For a more detailed summary of Q2 2024 progress read below. 

xAI

As AI makes waves around the world and gives every indication that it should continue to do so through the coming years, ARKVX is investing in cutting-edge companies at the forefront of the field. In May, we announced our investment into the $6 Billion series B¹ round for Elon Musk's xAI, alongside Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal and Kingdom Holding, and others. xAI's flagship model, Grok’s progress has been stunning, especially Grok 1.5-V’s ability² to understand images.

xAI is focused on the “development of advanced AI systems that are truthful, competent, and maximally beneficial for all of humanity." Our xAI investment thesis emphasizes the company's ability to marshal massive amounts of compute, including its existing infrastructure, both critical to foundation model companies seeking to push the frontier of large language models (LLMs) forward. 

If xAI can produce competitive infrastructure in the form of massive 100k+ GPU clusters over the next year, and if it can leverage proprietary data from Musk's other companies—including the trillions of tokens estimated to be posted on X every year and the massive amount of real-world data collected in the training of Tesla's full-self driving (FSD) and Optimus products—then it should be well-positioned to produce a state-of-the-art foundation model and capture significant share of a multi-trillion dollar addressable market.³  xAI also has a unique opportunity to embed its models in two technology platforms poised for convergence and rapid acceleration: autonomous electric vehicles and humanoid robotics. 

SpaceX

The ARK Venture Fund has also built a substantial position in SpaceX. Q2 2024 marked the historic fourth launch of Starship⁴ and its return to earth “like a meteor,” as captured in the image below.

Image credit: SpaceX

In addition to the impressive progress of Starship, the largest near-term opportunity for SpaceX is its Starlink satellite constellation that is designed to deliver global internet access. Globally, billions of individuals lack consistent internet access.⁵ At 1/10th the price-point of developed market customers, we believe this population represents a compelling ongoing market opportunity.

All-in, we believe that the satellite connectivity market could approach $100 billion annually over the medium term, and Starlink is well-placed to win the lion’s share given its unique positioning.

Boom Supersonic

The ARK Venture Fund invested in Denver-based Boom Supersonic in May. Boom Supersonic is a pioneering aerospace company founded with the goal of making supersonic air travel accessible and mainstream. Based in Denver, Colorado, Boom is focused on designing and building the world's fastest commercial airliner and reduce significantly flight times on key international routes.

Supersocial

In April, the Venture Fund made an investment in Supersocial. Founded in 2020, Supersocial is an independent video game and user experience (UX) studio focused on creating games for the metaverse, starting with Roblox.  Supersocial aims to pioneer the future of digital interactions, where people can seamlessly merge reality with fantasy and connect in ways that transcend physical boundaries.

Firmly

We also invested in Firmly last quarter. The company provides a business-to-business (B2B), white-label solution that reconciles consumer payments on various digital platforms, such as social media, credit card issuer marketplaces, and digital content publishers. By integrating the merchant’s presence into the consumer platform’s native interface, Firmly can provide first-party attribution data to both parties when executing the purchase, potentially leading to higher returns on ad spend (ROAS) that benefit both stakeholders. 

Firmly’s team has made significant progress with four global partners, all currently confidential, and is in beta testing with two of the top five social platforms in the world. Firmly already has ~30 live merchants,⁶ including Neiman Marcus, J Crew, Lascana, Fragrance X, DXL, and Bed Bath & Beyond, whose early results indicate meaningful increases in ROAS. Firmly also has just completed onboarding paperwork with a leading bank to provide an on-site marketplace solution that will enable its 200M+ credit card users to make purchases from thousands of merchants and pay with credit card points or buy now pay later (BNPL). Finally, Firmly currently is in the contract review stage with one of the world’s leading payment providers to develop a proof-of-concept that when executed could provide its touchless checkout solution to 1M+ merchants.

With that, we wish you a great quarter ahead. Please continue informing us about new ideas and deals. We pledge to keep working to give you access to what we believe are the world’s best private companies. Stay innovative!

Our Best wishes, 

Charlie, Chase, and The Broader ARK Venture Team

Disclosures

Investors should carefully consider the investment objectives and risks as well as charges and expenses of the ARK Venture Fund before investing. This and other information are contained in the ARK Venture Fund’s prospectus, which may be obtained here. The prospectus should be read carefully before investing.

To view the top 10 holdings in the ARK Venture Fund, click here. To view the most up to date portfolio, click here.

You should not expect to be able to sell your Shares other than through the Fund’s repurchase policy, regardless of how the Fund performs. The Fund’s Shares will not be listed on any securities exchange, and the Fund does not expect a secondary market in the Shares to develop. Shares may be transferred or sold only in accordance with the Fund’s prospectus. Although the Fund will offer to repurchase Shares on a quarterly basis, Shares are not redeemable and there is no guarantee that shareholders will be able to sell all of their tendered Shares during a quarterly repurchase offer. An investment in the Fund’s Shares is not suitable for investors that require liquidity, other than liquidity provided through the Fund’s repurchase policy. The ARK Venture Fund is a continuously-offered, non-diversified, registered closed-end fund with limited liquidity. 

All statements made regarding investment opportunities are strictly beliefs and points of view held by ARK and investors should determine for themselves whether a particular investment or service is suitable for their investment needs. Certain statements contained in this document may be statements of future expectations and other forward-looking statements that are based on ARK’s current views and assumptions, and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. The matters discussed in this document may also involve risks and uncertainties described from time to time in ARK’s filings with the U.S. Securities and Exchange Commission. ARK assumes no obligation to update any forward-looking information contained in this document. Past performance is not a guarantee of future results.

An investment in the ARK Venture Fund is subject to risks and you can lose money on your investment in the ARK Venture Fund. There can be no assurance that the ARK Venture Fund will achieve its investment objectives. The ARK Venture Fund’s portfolio is more volatile than broad market averages. The ARK Venture Fund also has specific risks, which are described below. More detailed information regarding these risks can be found in the ARK Venture Fund’s prospectus.

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ARK Investment Management LLC (“ARK Invest”) is the investment adviser to the ARK Venture Fund.