Justin Ernest Invested $500 Million in Startups Without a Traditional Venture Fund

Last year, Justin Ernest noticed a significant gap in the venture capital market: family offices and small institutional investors wanted to invest in the fastest-growing AI companies but could not get on their cap tables. Having spent over five years at Playground Global investing in deep tech and raising funds, Ernest believed he could solve this problem through his connections. Techcrunch.com reports .

Instead of launching a formal venture fund, which takes 12 to 18 months for new managers, Ernest leveraged his network to secure equity stakes in high-profile late-stage companies. He then offered these deals to around 30 small investors via special purpose vehicles (SPVs). Over the past 12 months, his firm, Sabertooth Capital, has invested nearly $500 million in 10 companies, including Anthropic, Anduril, Base Power, Databricks, PsiQuantum, and SpaceX.

Sabertooth Capital treats each deal as a separate fund, mostly structuring it as an SPV. Ernest writes checks ranging from $10 million to $275 million, allowing him to acquire a significant portion of equity. Importantly, he always participates in official funding rounds approved by the company, which enhances his reputation among various dubious intermediaries in the market.

At a time when startups like Anthropic and Anduril are fighting against unauthorized SPVs, investing through Sabertooth provides peace of mind for smaller partners. They know they are entrusting their money to an investor vetted and respected by the companies themselves. For instance, the CFO of PsiQuantum, valued at $7 billion, advised investors to invest specifically through Sabertooth.