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

2026-06-09 · Source: AI News & Artificial Intelligence | TechCrunch · Field: Finance & Economics — Capital Markets & Investment Management, FinTech & Digital Financial Services · Depth: Intermediate, short

Summary

Justin Ernest, through his firm Sabertooth Capital, has invested nearly \$500 million into 10 high-growth companies like Anthropic, Databricks, PsiQuantum, and SpaceX over the last 12 months, without operating a traditional venture capital fund. Ernest identified a market gap where family offices and smaller institutional investors sought access to top AI companies but lacked direct entry. Leveraging his extensive network from over five years at Playground Global, he secures allocations in later-stage funding rounds, writing checks from \$10 million to \$275 million. Sabertooth then offers these individual deals to approximately 30 smaller institutional investors using special purpose vehicles (SPVs), single-asset funds, or nominee structures, holding shares on their behalf. This approach has built a strong reputation, with companies like PsiQuantum's CFO even recommending Sabertooth for investment access, providing peace of mind to LPs amidst concerns about unauthorized SPVs. Ernest aims to eventually raise a traditional VC fund, using Sabertooth's strong returns, including a major return from Groq's \$20 billion acquisition by Nvidia, to build his track record.

Key takeaway

For investors seeking access to highly coveted, later-stage private companies, consider alternative structures like SPVs to bypass traditional VC fund limitations. Your due diligence should prioritize managers with direct company validation and a proven track record, as demonstrated by Sabertooth Capital's approach. This strategy offers a pathway to participate in exclusive funding rounds, potentially yielding significant returns from companies like SpaceX and Anthropic, while mitigating risks associated with unauthorized secondary markets.

Key insights

Justin Ernest bridges VC access gaps for smaller investors by utilizing his network to secure direct allocations in top startups via SPVs.

Principles

• Network is a "superpower" for deal flow.
• Reputation and trust are critical in private markets.
• SPVs offer flexible, targeted investment access.

Method

Sabertooth Capital secures allocations in company-approved funding rounds for high-profile, later-stage companies. These individual deals are then offered to a curated group of 30 smaller institutional investors via SPVs, single-asset funds, or nominee structures.

In practice

• Use SPVs for targeted, single-asset investments.
• Cultivate direct company relationships for vetting.
• Build a captive LP base for rapid capital deployment.

Topics

• Venture Capital
• Special Purpose Vehicles
• Family Offices
• Late-Stage Investing
• AI Startups
• Private Equity Access

Best for: Investor, Entrepreneur, Tech Journalist

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Editorial summary, takeaway, and curation by AIssential. Original article published by AI News & Artificial Intelligence | TechCrunch.