For makers and artists navigating the booming AI sector, the landscape has shifted. While traditional venture capital often moves too slowly to capture the earliest moves in deep tech, a new model is emerging that lets investors—and by extension, the communities supporting them—access top-tier companies like Anthropic and SpaceX without waiting for a formal fund to launch.
A new model for accessing top-tier AI
Justin Ernest identified a critical bottleneck last year. Family offices and smaller institutional investors were hungry for exposure to the fastest-growing AI firms but found themselves locked out of their cap tables. Having spent over five years at Playground Global investing in deep tech and leading fundraising efforts, Ernest felt he could bridge this divide.
Instead of the usual 12 to 18 month wait to launch a formal VC fund, Ernest leveraged his network to secure allocations of stock in high-profile, later-stage companies. He then packages these individual deals into special purpose vehicles (SPVs), effectively creating single-deal funds for a group of roughly 30 smaller institutional investors.
Over the past year, his firm, Sabertooth Capital, has deployed nearly $500 million across 10 companies. The portfolio includes heavyweights such as Anthropic, Anduril, Base Power, Databricks, PsiQuantum, and SpaceX. Each transaction is treated as a standalone fund, typically structured as an SPV where investors purchase shares in the vehicle that holds the stock.
The stakes are high for these deals. Ernest is writing checks ranging from $10 million to $275 million, securing significant equity positions while always participating in official, company-approved funding rounds.
Trust in a crowded market
Sabertooth is not the only entity offering family offices a chance to buy equity in individual late-stage startups. However, Ernest has raised capital rapidly because he has built a solid reputation in a sector that can sometimes feel opaque.
“Justin is authentically an investor,” said Benjamin Wagner, a CIO for a family office managing the wealth of 50 individuals. “He has judgment, he has expertise, he’s very technical, that really distinguishes him from other organizations that tend to, in my opinion, just trying to aggregate capital.”
The validation comes from the companies themselves. When Wagner attempted to invest directly in PsiQuantum, the quantum computing startup valued at $7 billion, the company’s CFO suggested he invest through Sabertooth instead.
“So, the first time I met [Ernest], I knew he was legitimate,” Wagner said. “Justin’s access is definitely different from some of these fly-by-night organizations.”
This endorsement is crucial. As startups like Anthropic and Anduril tighten restrictions on unauthorized SPVs, investing through Sabertooth offers limited partners peace of mind. They know their money is entrusted to an investor directly vetted and respected by the companies.
The power of networks
Beyond his technical acumen, the Harvard Business School graduate honed his communication skills after overcoming a childhood speech impediment. Ernest credits his ability to secure coveted stock allocations to his extensive network.
“I’ve always found that my sort of superpower is being the nucleus of my network, and I like to use that and utilize that in a very strategic way,” he told TechCrunch.
This network allows him to raise capital for new SPVs from family offices on a tight timeline.
“I have a captive set of LPs,” he said. “I can usually make four or five or six phone calls, and I know exactly what my LPs will commit.”
Looking ahead
Ernest plans to continue growing his business of raising funds for specific companies on behalf of his dedicated LP base. His ultimate goal remains raising a traditional venture fund. He believes Sabertooth’s strong returns from one-off SPVs will prove his track record, a key factor investors consider when backing a new fund.
Success is already on the horizon. Sabertooth has recorded a major return from chipmaker Groq, which was licensed and acqui-hired by Nvidia for $20 billion late last year. Next comes SpaceX’s highly anticipated IPO this Friday, followed by Anthropic’s expected public listing later this year. These moves are poised to deliver an even greater windfall for his investors.
While SPVs lack the street cred of traditional VC funds, Ernest remains confident that starting this way was the right strategic move. “I wanted to be in the action,” he said. “I think this will end up being one of the best vintages of our lifetime.”
Key takeaways
- Sabertooth Capital has deployed nearly $500 million into 10 high-profile AI and deep tech companies over the last 12 months.
- Ernest bypasses the traditional 12 to 18 month fund launch period by using SPVs to offer direct equity access to family offices and smaller institutions.
- Trust is central to the model, with companies like PsiQuantum and Anthropic recommending Ernest to investors due to his technical expertise and legitimacy.
- Upcoming events, including SpaceX’s IPO and Anthropic’s public listing, are expected to generate significant returns for the firm’s investors.
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