How Justin Ernest invested nearly $500M into hot startups without a traditional VC fund
Instead of spending a year raising a formal venture fund, the Sabertooth VC founder used a captive network of LPs to invest in startups like Anthropic, Anduril, and SpaceX.
Last year, Justin Ernest noticed a massive gap in how venture capital was working: Family offices and smaller institutional investors were eager to invest in the fastest-growing AI companies but couldn’t get access to those cap tables.
Having spent over five years at Playground Global investing in deep tech and helping lead fundraising, Ernest was confident his connections to both investors and founders would allow him to bridge that gap.
Instead of launching a formal VC fund, a process he says takes new managers anywhere from 12 to 18 months, Ernest used his network to secure allocations of stock in high-profile, later-stage companies. He then offers these individual deals to a group of about 30 smaller institutional investors using special purpose vehicles (SPVs), single-asset funds, and nominee structures. In the latter, his firm, Sabertooth Capital , holds shares on behalf of participating investors rather than through a traditional SPV.
Over the last 12 months, Sabertooth has invested nearly $500 million into 10 companies, including Anthropic, Anduril, Base Power, Databricks, PsiQuantum, and SpaceX. The firm treats each deal as its own separate fund, in most cases structuring it as an SPV, in which the fund’s investors buy shares in the vehicle that owns the stock.
He’s writing checks ranging from $10 million to $275 million — meaning he’s gaining significant chunks of shares — and always participating in official, company-approved funding rounds.
Sabertooth is not the only firm offering family offices an opportunity to purchase equity in individual high-profile, late-stage startups. However, Ernest quickly raised a significant amount of cash from them because, in the sometimes-shady world of small allocations and SPVs targeting family offices, he’s earned a solid reputation.
“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.”
When Wagner tried to invest directly in PsiQuantum, the quantum computing startup last valued at $7 billion, the company’s CFO suggested that he invest through Sabertooth.
“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.”
That validation is extremely important. At a time when startups like Anthropic and Anduril are cracking down on unauthorized SPVs , investing through Sabertooth gives smaller limited partners some peace of mind. They know they are entrusting their money to an investor who is directly vetted and respected by the companies themselves.
Beyond technical knowledge, the Harvard Business School graduate honed his communication skills after largely overcoming a childhood speech impediment. Ernest credits his ability to secure allocations of stock when highly coveted tech companies are raising to his wide 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.
For instance, he can generally obtain investor capital for a new SPV 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.”
Ernest told TechCrunch that for now, he wants to continue growing his business of raising funds for specific companies on behalf of his dedicated LP base. However, his ultimate goal is to eventually raise a traditional venture fund. That’s a difficult task, but he believes Sabertooth’s strong returns via these one-off SPVs to prove his track record, something investors care about most when deciding to back a new fund.
He’s on his way with that wish. Sabertooth has already had one major big return from chipmaker Groq, which was licensed and acqui-hired by Nvidia for $20 billion late last year. Next up is SpaceX’s highly anticipated IPO this Friday, along with Anthropic’s expected public listing later this year. They are poised to deliver an even greater windfall for his investors.
But SPVs don’t have the same kind of street cred as traditional VC funds. Yet Ernest remains confident that starting with them, and earning a solid rep with family offices, rather than launching an emerging venture fund and duking it out with competitors 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.”
Updated to reflect Sabertooth’s total capital deployed .
When you purchase through links in our articles, we may earn a small commission . This doesn’t affect our editorial independence.
Marina Temkin is a venture capital and startups reporter at TechCrunch. Prior to joining TechCrunch, she wrote about VC for PitchBook and Venture Capital Journal. Earlier in her career, Marina was a financial analyst and earned a CFA charterholder designation.
You can contact or verify outreach from Marina by emailing marina.temkin@techcrunch.com or via encrypted message at +1 347-683-3909 on Signal.
Get an inside look at what it takes to scale and succeed from leaders at Mach Industries, Founders Fund, and Shinkei Systems. Through candid fireside chats and high-impact networking, you’ll walk away with valuable insights and new connections.
WWDC 2026: Everything announced on Siri AI, iOS 27, Apple Intelligence, and more Morgan Little Aisha Malik
WWDC 2026: Everything announced on Siri AI, iOS 27, Apple Intelligence, and more
WWDC 2026: Everything announced on Siri AI, iOS 27, Apple Intelligence, and more
Anthropic’s Claude Fable 5 is a version of Mythos the public can access today Rebecca Bellan
Anthropic’s Claude Fable 5 is a version of Mythos the public can access today
Anthropic’s Claude Fable 5 is a version of Mythos the public can access today
It’s not FAANG anymore. It’s MANGOS. Julie Bort
Microsoft’s open source tools were hacked to steal passwords of AI developers Zack Whittaker
Microsoft’s open source tools were hacked to steal passwords of AI developers
Microsoft’s open source tools were hacked to steal passwords of AI developers
Founders share VC horror stories, and some are naming names Julie Bort
Founders share VC horror stories, and some are naming names
Founders share VC horror stories, and some are naming names
Google will pay SpaceX $920M per month for compute Sean O'Kane
Google will pay SpaceX $920M per month for compute
Google will pay SpaceX $920M per month for compute
Mira Murati steps back into the spotlight, carefully Connie Loizos
Mira Murati steps back into the spotlight, carefully
Mira Murati steps back into the spotlight, carefully
Key takeaways
- Justin Ernest's strategy could serve as a model for Brazilian investors seeking diversification without the complexity of a formal fund.
- The growing demand for cutting-edge technology in Brazil highlights the need for more flexible and accessible investment structures.
- Building a solid reputation is crucial for investors looking to access opportunities in high-profile startups.
Editorial analysis
Justin Ernest's innovative approach of leveraging a network of investors to access high-growth startups reflects a growing trend in the venture capital ecosystem. In Brazil, where the venture capital market is still developing, this strategy could serve as a model for local investors looking to diversify their portfolios without the complexities of a formal fund. Building strong relationships between investors and founders is crucial, especially in an environment where trust and reputation are key to success.
Moreover, the increasing demand for investments in cutting-edge technologies, such as artificial intelligence and quantum computing, highlights the need for more flexible investment structures. This is particularly relevant for Brazil, where innovative startups are emerging but often face barriers to accessing capital. Ernest's experience in connecting investors to investment opportunities could inspire similar initiatives in the country, potentially accelerating the growth of the tech sector.
On the other hand, the validation Ernest received from reputable investors underscores the importance of credibility in the sector. For Brazilian investors, building a solid reputation can be a differentiator in a competitive market. As more investors seek access to high-profile startups, the need for transparency and ethical practices becomes increasingly evident, especially in a landscape where distrust can be a significant barrier.
Finally, Ernest's strategy of treating each investment as a separate fund may offer valuable lessons for Brazil. This approach allows for more focused and personalized management of investments, which could be appealing to investors seeking greater control over their allocations. As the technology market in Brazil evolves, observing how these practices develop could provide insights into the future of startup investment in the country.
What this coverage includes
- Clear source attribution and link to the original publication.
- Editorial framing about relevance, impact, and likely next developments.
- Review for readability, context, and duplication before publication.
Original source:
TechCrunch AIAbout this article
This article was curated and published by AIDaily as part of our editorial coverage of artificial intelligence developments. The content is based on the original source cited below, enriched with editorial context and analysis. Automated tools may assist with translation and initial structuring, but publication decisions, factual review, and contextual framing remain editorial responsibilities.
Learn more about our editorial process