Performance summary

As recently stated in our annual letter to all Fundrise investors, 2025 was the year of AI. And nowhere is that sentiment more directly reflected than in the performance of the Innovation Fund.

In 2025, the Fundrise Innovation Fund delivered an impressive +43.58% return net of fees.

To put that level of performance in perspective, over the same time period the Nasdaq returned 21.1%, the S&P 500 returned 17.9%, and the hedge fund industry as a whole returned an average of 12.6% (its best performance since 2009).1

Like all great investment returns (at least in our opinion), the Fund’s performance in 2025 is primarily the result of patient execution, combining the right macro trend (in this case, the emergence of AI) with the right assets (in this case, our portfolio companies), and as always a healthy dose of fortunate timing.

Of course, it is not unheard of for top venture capital funds to deliver better than average performance, with the top quartile of venture funds over the past several decades having delivered average IRRs of more than +20% (with a smaller percentage occasionally exceeding the +40% mark).2

What is unique is to deliver this level performance in a fund structure as accommodating and investor forward as the Innovation Fund.

As many of our investors know, investing into a top-tier venture fund typically requires one to (a) be an institution capable of minimum investments in the tens of millions of dollars (b) agree to be locked up in a fully illiquid fund for 7+ years and (c) pay 20-40% of the profits from such returns to the manager of the fund (this is also known as the “the carried interest” or “promote”).

The Innovation Fund by contrast has not only managed to deliver top-tier returns but done so with essentially no minimum investment, regular quarterly liquidity, and 100% of the profits paid out to investors (i.e. there is no “promote” or “carried interest” paid to us as the manager).

It is a structure so unique and investor friendly, that often we find those in the industry skeptical when they first learn of it.

A portfolio built to scale

It is important to remember that the strong returns of 2025 did not occur overnight. The portfolio as it exists today is a meticulously curated and intentionally concentrated collection of companies that we believe are “the” category defining businesses in their respective industries.

Not merely great investments, but companies that will fundamentally change the future and how we all live in it. These are companies that we have followed eagerly, sought out specifically, and (in most instances) become avid customers of.

And, as we’ve stated before, we believe it is a portfolio on par with that of any major venture capital firm in the world.

* View all Innovation Fund assets here.

** Reflects the latest financing round or confirmed secondary activity, whichever is more recent. 

2025 was truly a breakout year for AI with growth accelerating exponentially and returns across a majority of the investment world increasingly boiling down to the singular question of: How much AI exposure do you have?

Unsurprisingly, this also led to even more people asking the question “Are we in an AI bubble?”

And while the answer to that is long, complex, and full of nuance; our opinion, as it relates to the Innovation Fund, is no—not at this time.

A realistic look at valuations

In theory, a company’s value (i.e. what it’s worth) can be determined by adding up all its future cash flows and then discounting them back by some predetermined rate of return. And while this is a bit overly simplistic, when investing in high-growth technology companies it is often useful to start by evaluating the fundamentals, in particular (1) growth rate and (2) revenue scale.

So how does the Innovation Fund’s portfolio stack up?

Based on the most recent available reporting we’ve compiled (including company press releases, news articles, and Bloomberg-style aggregation), the portfolio’s position-weighted growth remains significantly above public tech benchmarks:

* GARM is Growth Adjusted Multiple calculated by taking the revenue multiple and dividing it by the annual growth rate. This is calculated on a position by position basis and then weighted.

Even when looking at median/average growth rates, the gap remains wide with the Fund’s portfolio showing materially higher growth than either QQQ or the S&P 500. Said more simply, by nearly every measure, the portfolio companies of the Innovation Fund are growing significantly faster than their publicly traded counterparts.

Of course, higher growth rates are typical of very early stage companies, so where does the portfolio stand in terms of maturity and scale of revenue? In short, approximately 80% of the portfolio is invested in companies that we describe as public scale or “Pre-IPO” meaning that they are generating revenues in excess of $500m annually.

This means one could argue, justifiably, that on a growth-adjusted basis, these portfolio companies are actually valued below their publicly traded tech peers—making them a true value investment.

As anyone with real experience in venture likely knows, a portfolio of this profile—meaning one that has such a large number of industry leading companies that are delivering both significant operating scale and early stage-like growth rates—is uncommon.

Looking ahead

Last year we speculated that AI was a technology shift on the order of magnitude of the internet before it, or potentially even larger. In 2025, based on our own lived experience at Fundrise, that thesis started to feel less like a prediction and more like an inevitability.

AI is not just creating new products or companies. It is increasingly rewriting the cost curves and growth curves of every business that adopts it, changing what can be built, how fast it can scale, and how many people it takes to run it.

That has two very important implications for investors:

  1. Lack of exposure to AI will increasingly mean investors are getting left behind: What was true in 2025, is likely to be (in our opinion) only that much more true in 2026: those who are invested in the companies leading the age of AI innovation will increasingly see outsized investment returns. Those who shun the sector out of fear, lack of knowledge, or otherwise, risk being left behind in one of the greatest wealth creation waves of the past several decades (if not longer).
  2. The center of gravity is increasingly moving to the private markets: While public markets have given investors exposure to a small group of mega-cap companies, arguably the most important AI-native businesses remain in the private markets. And while these companies may very well IPO in the coming years, much of the value creation and compounding benefits will have accrued to those who have been invested prior to that point.

This is the fundamental bet the Innovation Fund is designed to represent: meaningful exposure to the private technology leaders shaping the next era of AI, in a low-fee vehicle built for long-duration compounding. We believe that our focused concentration has been a major reason the Fund performed so well in 2025, and it is why we remain so excited about what lies ahead.

As always we appreciate your trust and support.

Onward,

Fundrise