How Justin Ernest invested nearly $500M into hot startups without a traditional VC fund

Overview

TechCrunch profiles Justin Ernest, founder of Sabertooth Capital, who invested nearly $500 million into high-profile startups without raising a traditional venture fund. Instead of spending 12 to 18 months launching a formal fund, Ernest used a captive network of about 30 smaller institutional investors and structures like special purpose vehicles and nominee arrangements. Over 12 months, Sabertooth backed 10 companies including Anthropic, Databricks and SpaceX.

Key Takeaways

Justin Ernest invested nearly $500 million without raising a traditional VC fund.
He uses special purpose vehicles, single-asset funds and nominee structures instead.
Sabertooth backed 10 companies in 12 months, including Anthropic, Base Power, Databricks, PsiQuantum and SpaceX.
Checks range from $10 million to $275 million, always in company-approved rounds.
His company-vetted access reassures LPs at a time when startups like Anthropic crack down on unauthorized SPVs.

Stats & Key Facts

#Invested nearly $500 million over the last 12 months
#Backed 10 companies
#A group of about 30 smaller institutional investors
#Checks ranging from $10 million to $275 million
#Spent over five years at Playground Global
#Traditional fund launch takes 12 to 18 months
#PsiQuantum last valued at $7 billion

The gap Ernest spotted

He saw smaller investors locked out of top AI cap tables.

›Family offices and smaller institutional investors wanted access to the fastest-growing AI companies.
›They could not get onto those cap tables.
›Ernest believed his connections to investors and founders could bridge that gap.

Having spent over five years at Playground Global investing in deep tech and helping lead fundraising, Ernest used his network rather than launching a formal fund, which he says takes new managers 12 to 18 months.

How Sabertooth is structured

Each deal becomes its own fund.

›Ernest secures allocations of stock in high-profile, later-stage companies.
›He offers individual deals to about 30 smaller institutional investors.
›He uses special purpose vehicles, single-asset funds and nominee structures.

In a nominee structure, Sabertooth holds shares on behalf of investors rather than through a traditional SPV. The firm treats each deal as its own separate fund, in most cases structuring it as an SPV in which investors buy shares in the vehicle that owns the stock.

The portfolio and check sizes

Sabertooth has moved quickly across major names.

›Over 12 months it invested nearly $500 million into 10 companies.
›Holdings include Anthropic, Base Power, Databricks, PsiQuantum and SpaceX.
›Checks range from $10 million to $275 million, always in official, company-approved funding rounds.

Why reputation matters

Trust sets Sabertooth apart from rivals.

›Sabertooth is not the only firm offering family offices equity in late-stage startups.
›Benjamin Wagner, a family office CIO, called Ernest 'authentically an investor' with judgment and expertise.
›When Wagner tried to invest directly in PsiQuantum, the company's CFO suggested he invest through Sabertooth.

As startups like Anthropic crack down on unauthorized SPVs, investing through Sabertooth gives smaller limited partners peace of mind because Ernest is directly vetted by the companies. PsiQuantum was last valued at $7 billion.

His edge and his goal

Network speed is Ernest's stated superpower.

›Ernest credits his ability to secure allocations to his wide network.
›He says he can make four to six phone calls and know what his captive LPs will commit.
›He is a Harvard Business School graduate who largely overcame a childhood speech impediment.

For now, Ernest wants to keep growing his business of raising funds for specific companies. His ultimate goal is to eventually raise a traditional venture fund, which he believes Sabertooth's returns can support.

Frequently Asked Questions

How much has Sabertooth invested?

Nearly $500 million over the last 12 months across 10 companies, according to Ernest.

Which companies has Sabertooth backed?

Companies including Anthropic, Base Power, Databricks, PsiQuantum and SpaceX.

How does Ernest invest without a traditional fund?

He secures stock allocations and offers individual deals to about 30 smaller institutional investors using SPVs, single-asset funds and nominee structures.

What check sizes does he write?

Checks ranging from $10 million to $275 million, always in official, company-approved funding rounds.

Why do LPs trust Sabertooth?

Because Ernest is directly vetted and respected by the companies themselves, which matters as startups like Anthropic crack down on unauthorized SPVs.

Ernest's captive LP network let him deploy nearly $500 million into top startups, with a long-term goal of raising a traditional venture fund.