Fundrise Innovation Fund II: The 2.50% Fee VCX Shareholders Voted Down in February Is the Fee the New Fund Charges by Default

What was filed, and when

On August 24, 2026 Fundrise filed Pre-Effective Amendment No. 2 to the Form N-2 for Fundrise Innovation Fund II, LLC. The original N-2 went in on June 8, 2026, alongside a Form N-8A, and a first amendment followed on July 30.

The wire services picked up the June filing and reported the headline number, which is that the fund is registered for up to a billion dollars. What nobody has done is read the fee table against the fee history of the fund it is a sequel to. That is what this piece is.

Everything below is read from three primary documents: the N-2/A above, VCX's definitive proxy statement of February 2026, and VCX's annual report on Form N-CSR for the year ended March 31, 2026.

The structure, in one table

The strategies are not merely similar. The N-2/A says it outright: the adviser "also manages Fundrise Innovation Fund, LLC ('VCX'), a closed-end investment company that operated as a tender offer fund from 2021 to 2026, at which time its shares began trading on the New York Stock Exchange under the ticker 'VCX'. VCX's investment objective and strategy is substantially the same as the Fund's."

Both funds buy the same thing: at least 80% of net assets in equity and debt of what Fundrise calls Innovation Companies, meaning mid-to-late-stage private technology businesses, held directly and through co-investment vehicles and SPVs. If you already know what VCX owns, you know the shape of what Fund II intends to own.

The February vote nobody wrote up

Here is the part that has not been reported anywhere I can find.

On February 19, 2026, VCX held a special meeting of shareholders. The record date was January 30, 2026, when 28,346,610 shares were outstanding. Three proposals were on the ballot, and it is worth seeing how differently they went.

The annual report states the outcome without euphemism: "the Amended Advisory Agreement did not receive requisite affirmative votes at the Special Meeting of Shareholders held on February 19, 2026 to approve this agreement pursuant to the 1940 Act, and accordingly, the Amended Advisory Agreement was not adopted by the Fund."

Why 60% of the votes was not enough

An advisory agreement is not decided by a simple majority. Section 2(a)(42) of the Investment Company Act requires a "majority of the outstanding voting securities," which the proxy correctly defines as the lesser of (1) 67% or more of the shares present, if holders of more than 50% of outstanding shares are present, or (2) more than 50% of all outstanding shares.

Run the arithmetic on the numbers above. Total shares present, including abstentions, were 21,113,858, or 74.48% of the 28,346,610 outstanding, so the first prong applies. Sixty-seven percent of the shares present is 14,146,285. More than half of all outstanding shares is 14,173,306. The lesser of the two, and therefore the actual bar, was 14,146,285 votes. Both of those are our calculations from the statute and the vote counts: no filing publishes a threshold. The annual report says only that the agreement "did not receive requisite affirmative votes ... pursuant to the 1940 Act"; the shares present, the 28,346,610 outstanding and the vote totals all come from the proxy and the annual report, and the test itself is Section 2(a)(42).

The proposal got 12,716,173. It missed by 1,430,112 votes.

That is not a rounding error or an apathy problem. 7,803,446 shares were voted actively against, which is 37% of everything present. These were the same investors who, on the same ballot, handed the listing 78.3% of votes cast and the lockup 71.6%. They read three questions, approved two, and refused the one that took money out of their pockets.

What they were shown before they voted

The proxy did not hide the impact, to Fundrise's credit. It disclosed that had the proposed fee been in force in the fiscal year ended March 31, 2025, the adviser's fee would have been $4,068,000 instead of $3,004,000, about 35.4% higher. It also printed a pro forma expense table:

The pitch, in other words, was that the total barely moves: 3.19% to 3.20%. That is true only if the other lines fall as forecast, which requires the fund to keep growing. Shareholders were being asked to swap a certain 0.65 point increase in the fee that goes to the adviser for a projected decline in expenses that do not.

And the reason given was specific. From the proxy: the increase was sought "to better align the Fund with its peers, cover the additional cost of supporting a publicly-traded fund, and preserve the ability of the Fund's investment adviser ... to invest in the platform, people, and capabilities required to compete."

The thing worth noticing

Read those two facts next to each other.

In February, Fundrise asked the holders of a non-listed tender offer fund to pay 2.50%, partly on the grounds that the fund was about to become listed and that listed funds cost more to run. The holders said no, and it still pays 1.85%.

In June it registered a new non-listed tender offer fund with substantially the same strategy, and by August the fee table on that fund reads 2.50%.

I want to be precise about what is and is not being claimed, because this is the kind of comparison that is easy to overstate.

Nothing about this is improper. Every fund sets its initial fee this way. The board of a new fund, together with the adviser as sole initial shareholder, adopts the investment management agreement before the public arrives, and that is how essentially every fund in America is launched. Fundrise disclosed the 2.50% on the face of the fee table, which is where it belongs.

It is also fair to say the rationale had three legs, not one. Peer alignment and the adviser's investment capacity apply to a non-listed fund just as much as to a listed one. Only the middle leg, the cost of supporting a publicly-traded fund, does not.

But an investor deciding whether 2.50% is a fair price for this strategy now has something better than a brochure to reason from: a population of about 28 million shares that was asked the same question and answered it, and a board that concluded the higher fee was in shareholders' best interests anyway. Both facts are useful. Neither is decisive. Both are on EDGAR.

What 2.50% looks like against the rest of the shelf

The adviser is the same legal entity across Fundrise's registered funds, which makes the internal comparison clean. VCX's own board made it in the annual report, observing that the 1.85% VCX pays "is greater than the management fee charged to each of the other registered investment companies managed by the Adviser," and that the Flagship Fund and the Income Fund each pay 0.85%.

On the external comparison, the annual report records what the board was told by ISS Market Intelligence: VCX's management fee was "slightly below the median of the Fund's Peer Group" while its total expense ratio, "including the effect of certain marketing related expenses paid by the Fund," was above the median.

That parenthesis deserves a second read. Fund II's expense table carries the same feature, as a separate line: Other Expenses - Marketing, 0.40%. Investors in the fund pay a defined slice of the cost of selling the fund to other investors. It is disclosed, it is not unusual in this corner of the market, and it is the kind of line that a headline management-fee comparison misses entirely. When you compare Fund II to anything else, compare 3.41%, not 2.50%.

One caveat on that 3.41%: the filing says the estimate assumes $250,000,000 of net assets and warns that "if the Fund were to raise proceeds significantly less than this amount, net assets would be significantly lower and some expenses as a percentage of net assets would be significantly higher." A fund that raises $50 million will not have a 3.41% expense ratio. It will have a worse one.

The structural things a fee table will not tell you

You cannot get out on demand. The prospectus is blunt: "The Fund is not a liquid investment. No Shareholder will have the right to require the Fund to redeem its Shares." Repurchase offers are expected quarterly but the Fund "intends, but is not obligated," to make them, they are at the Board's sole discretion, and they are "not expected" to exceed 5% of net assets. If more than 5% of the fund wants out in a quarter, everyone gets prorated. Our Apollo repurchase series shows what that looks like in practice when the queue is long: eleven consecutive oversubscribed quarters and a fill rate that fell from 50% to 27%.

There is no repurchase fee today, and that can change. The filing says the Fund "does not currently charge a repurchase fee, and it does not currently expect to impose a repurchase fee," then reserves the right to charge up to 2.00%, "subject to the discretion of the Adviser."

It is a C corporation until it is not. The Fund "intends to elect and intends to qualify to be taxed as a regulated investment company ... in a future taxable year, following such time as the Fund determines that it meets the requirements to qualify as a RIC and build the Fund to a size that the diversification requirements are not overly constraining." Until then it is taxed as a C corporation, and the prospectus adds: "There can be no guarantee that the Fund will ever be able to qualify as a RIC." A RIC passes income through untaxed at fund level. A C corporation does not, which means gains on the portfolio can be taxed once inside the fund and again when you sell. The fee table's Deferred Income Tax Expense line reads 0.00% today only because, in the filing's words, "the Fund currently has no portfolio investments."

It will not pay you anything. "It is likely that many of the Portfolio Companies in whose securities the Fund invests will not pay any dividends, and this, together with the Fund's expenses, means that there can be no assurance the Fund will have substantial income or pay dividends. The Fund is not a suitable investment for any investor who requires dividend income."

Why Fundrise wants a non-listed venture fund again

There is a reasonable commercial logic here, and it is worth stating rather than leaving as an implication.

VCX's own proxy argued that its tender offer structure was underused. It disclosed that "for the fourth quarter of 2025, the Fund only received repurchase requests totaling 1.5% of its outstanding shares" against a 5% allowance. Fundrise's argument was that shareholders were not using the liquidity they had, and that a listing would give them something better.

Then it listed, and the market did something Fundrise's own pitch had anticipated. The proxy told shareholders that a durable premium "can turn demand into an engine that potentially accelerates returns," because selling shares above NAV adds to the fund's assets. VCX has spent the period since its August unlock trading at a very large premium to its last filed NAV, which we tracked session by session in the complete VCX price record and in what happened after the unlock.

A continuously offered non-listed fund sells shares at NAV, so it cannot capture a premium the way a listed fund can. What it can do is take in money every day without a market price to argue with, from a customer base that already exists on the Fundrise platform. Whether that is better for the investor than buying VCX on the NYSE depends entirely on what premium VCX trades at on the day you ask, which is a question our VCX review keeps current rather than one this article can answer once.

The tax cycle Fund II is at the start of, and VCX is in the middle of

The C corporation point is not theoretical, because VCX has already been through it and its accounts show the bill.

VCX was taxed as a C corporation for its fiscal years 2023, 2024 and 2025, and qualified as a RIC only for the year ended March 31, 2026. That took about three and a half years. Fund II is now filing the same sentence VCX's 2024 prospectus carried: elect RIC status in a future taxable year, C corporation until then.

What the annual report adds is what happens on the way out. Because VCX's assets carried "an aggregate net unrealized built-in gain at the time it first qualified as a RIC," the fund "will be subject to tax at regular corporate rates to the extent the Fund recognizes such gain within five years after so qualifying, even if the Fund distributes such gain."

That tail is already on the balance sheet. At March 31, 2026 VCX carried a net deferred tax liability of $3,850,000 (gross deferred tax liabilities of $4,077,000 against $227,000 of deferred tax assets) and a current tax liability of $164,000, with the rate reconciliation labelling that $164,000 as "Section 1374 built-in gains tax." The deferred liability is struck at the 21% federal rate plus estimated state and local tax, and the filing notes it is "accounted for in calculating the Fund's quarterly NAV."

So an investor buying Fund II at launch is buying the front end of a cycle whose back end is visible in the sibling fund's financial statements: several years of corporate-rate tax on gains, then a RIC election, then five more years during which pre-election gains can still be taxed at corporate rates when realised.

Fundrise says out loud that this is not a listing play

The obvious sales pitch for Fund II writes itself: VCX went from a non-listed tender offer fund to a NYSE listing, and anyone holding through it did extremely well. Get in early on the sequel.

Fundrise pre-empts exactly that, in a risk factor headed "No Assurance of Future Exchange Listing":

"The Fund does not currently intend to list the Shares for trading on any securities exchange. Although the Adviser also serves as the investment adviser to VCX, an affiliated closed-end fund with substantially the same investment objective and strategy as the Fund, whose shares began trading on the New York Stock Exchange in 2026 following a period of operating as a non-listed tender offer fund, there can be no assurance that the Fund will ever list its Shares on a securities exchange or seek to do so ... VCX's listing should not be viewed as an indication that the Fund will follow a similar [path]."

Elsewhere it is blunter still: "the Fund does not expect any secondary market to develop for the Shares in the foreseeable future. Therefore, there should be no expectation that the Fund will list on a securities exchange in the future, and investments in the Fund should not be considered to be a liquid investment."

Credit where it is due. That paragraph is the sponsor telling investors not to buy the fund for the reason they are most likely to buy it. If you see Fund II sold anywhere as a chance to catch the next VCX, the registration statement contradicts the pitch.

Update, September 19, 2026: the fund started, and VCX's own total caught up with it

Three things have happened since this page was published on August 25, and each one bears on its argument.

1. The fund crossed from paper to live on September 4

Between September 11 and September 14, 2026, ten Forms 3 were filed for Fundrise Innovation Fund II, every one of them with an event date of September 4, 2026. They cover the entire slate: Benjamin S. Miller (director and President), Alison Staloch (Chief Financial Officer), Bjorn Hall (Chief Compliance Officer), directors Jennifer Blatnik, Jeffrey Deitrich and Glenn Osaka, and others.

A Form 3 is an insider's initial statement of beneficial ownership, and the obligation to file one begins when the fund's shares become registered. We read September 4, 2026 as the date the registration statement went effective, and we are labelling that as a reading rather than a quotation: EDGAR carries no effectiveness notice for this CIK, and as of today no final prospectus has been filed either. The last substantive filing is still Pre-Effective Amendment No. 2 of August 24. What is not a reading is the slate itself — ten insiders, one date, filed in the same week.

So the fee table discussed above is no longer a proposal in a draft. It is the fee table of a fund that has directors and officers on the clock.

2. VCX's total expense ratio is now 3.40%, against Fund II's 3.41%

This page's argument has been about the management fee line: 1.85% at VCX, 2.50% at Fund II, the rate shareholders declined. On September 9, 2026 VCX filed a new shelf prospectus (Form N-2ASR) with a current fee table, and at the bottom line the two funds have converged:

Read that table with the last row in mind. These are not like-for-like: VCX's percentages are struck on an assumed $1.0 billion of net assets and Fund II's on an assumed $250 million, so fixed costs land four times harder on Fund II's denominator, and both are estimates the filings say may be wrong. The honest statement is not "the two funds cost the same." It is that the 0.65-point gap at the management-fee line is not a 0.65-point gap at the total, because VCX carries 1.10% of marketing expense where Fund II assumes 0.40%. A VCX shareholder who voted down 2.50% in February is, on these estimates, already paying a total within a basis point of the new fund's — which is what happens when the fee you are allowed to vote on is not the only thing that moves. The other half of that story, the 3.00% expense cap the board removed at the listing without a shareholder vote, is below.

What we will be watching

As filed on August 24, Pre-Effective Amendment No. 2 still had blanks in it, including the adviser's assets under management and, notably, the percentage cap in the Expense Limitation Agreement, which the narrative section renders as "[ ]%" even though the fee table itself is filled in at 2.50%. Nor does the fee table carry a fee-waiver line, so as filed, no expense cap was committed to a number. That is not the same as saying there will be none: the agreement exists in the document and the percentage was simply not filled in. That amendment is still the last substantive filing on EDGAR, even though the insider filings put the fund's officers on the clock from September 4 (see the update above), so those blanks have not been filled in anywhere we can read.

The cap matters twice over, because the same agreement gives the adviser the right to claw back waived fees for three years afterwards, so long as the recoupment does not push expenses above the cap in force when the waiver happened. VCX shows what that looks like in practice: its cap was 3.00%, and in the year ended March 31, 2026 the adviser recouped $724,000 of previously waived fees, with $4,261,000 still subject to recoupment ($432,000 expiring in the year to March 2027 and $3,829,000 in the year to March 2028). A waiver is a loan, not a gift.

There is one more asymmetry worth recording. VCX shareholders refused the fee increase, so they kept 1.85%. But the expense cap was a board decision, not a shareholder one, and the board terminated the 3.00% Expense Limitation Agreement effective as of the NYSE listing. Shareholders held the line on the fee they were allowed to vote on, and lost the protection they were not.

Three things will tell you how this lands.

1. Whether the 2.50% survives into a final prospectus. It has been in the fee table since the June N-2 and through two amendments, and no filing since has changed it. If the fund is now selling, the rate it sells at is the rate in that table until a later filing says otherwise.
2. What the expense cap is set at. A generous cap for the first year or two would materially change the real cost of the early money, and it is the single most important number still missing.
3. Whether VCX's fee is ever put to shareholders again. Nothing prevents the adviser from asking a second time. The first attempt failed by 1.4 million votes with a much smaller and less liquid holder base than VCX has now.

Sources

Every figure in this article comes from one of the following, read directly on EDGAR rather than from any summary, directory or press release.

• Fundrise Innovation Fund II, LLC, Form N-2/A (Pre-Effective Amendment No. 2), filed August 24, 2026 — accession 0001213900-26-092855. Registered amount, structure, fee table, minimum, repurchase policy, repurchase fee reservation, tax treatment, distribution policy, the VCX comparison language, and the expense limitation agreement.
• Fundrise Innovation Fund, LLC, definitive proxy statement (DEFR14A), filed February 19, 2026 — accession 0002071844-26-000216. Record date and shares outstanding, the 1940 Act voting standard, the pro forma expense table, the $3,004,000 versus $4,068,000 disclosure, the stated rationale, and the Q4 2025 repurchase request figure.
• Fundrise Innovation Fund, LLC, annual report on Form N-CSR for the year ended March 31, 2026, filed June 3, 2026 — accession 0001999371-26-011950. The 1.85% fee and the $6,870,000 incurred, the vote tallies and the statement that the agreement was not adopted, the 0.85% comparison to the Flagship and Income funds, the ISS peer-group observations, the termination of the expense limitation agreement at listing, and the financial highlights.
• Fundrise Innovation Fund, LLC, Form 8-K filed July 27, 2026 — accession 0001213900-26-081869. The acceleration of the lockup expiration from September 14, 2026 to August 13, 2026.

Nothing in this article is investment advice. We hold no position in VCX and earn no commission from Fundrise, which does not operate an affiliate programme for these funds.