Justin Ernest found a way to invest nearly $500 million into some of the hottest AI companies without the typical 12 to 18 months it takes to launch a traditional venture capital fund. Instead, the former Playground Global investor used his network to secure allocations in later-stage companies and then packaged those deals for about 30 smaller institutional investors through special purpose vehicles (SPVs), single-asset funds, and nominee structures.

Over the past 12 months, Ernest's firm, Sabertooth Capital, has invested in 10 companies, including Anthropic, Anduril, Base Power, Databricks, PsiQuantum, and SpaceX, with individual checks ranging from $10 million to $275 million. This unconventional approach highlights a growing gap in venture capital: family offices and smaller institutional investors want access to the fastest-growing AI companies but struggle to get a seat at the table in traditional funding rounds.

Why Is This Different From Traditional Venture Capital?

The traditional path to becoming a venture investor requires launching a formal fund, a process that can take over a year and involves extensive regulatory and operational setup. Ernest bypassed this entirely by treating each deal as its own separate fund. In most cases, he structures these as SPVs, which are investment vehicles that allow multiple investors to buy shares in a single company without forming a traditional partnership.

What makes Sabertooth stand out in a sometimes murky world of small allocations and SPVs is Ernest's reputation and direct relationships with founders. When Benjamin Wagner, a chief investment officer for a family office managing wealth for 50 individuals, tried to invest directly in PsiQuantum, a quantum computing startup valued at $7 billion, the company's CFO actually suggested he invest through Sabertooth instead.

"Justin is authentically an investor. 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," said Benjamin Wagner, a CIO for a family office.

Benjamin Wagner, Chief Investment Officer, Family Office

That validation matters enormously. At a time when startups like Anthropic and Anduril are cracking down on unauthorized SPVs, investing through Sabertooth gives smaller limited partners peace of mind. They know their money is going through an investor who is directly vetted and respected by the companies themselves.

How Does Sabertooth Actually Structure These Deals?

• Special Purpose Vehicles (SPVs): Ernest creates individual SPVs for each company investment, allowing multiple investors to pool capital and buy shares in a single company without forming a traditional partnership structure.
• Single-Asset Funds: Some deals are structured as standalone funds focused entirely on one company, giving investors a dedicated vehicle for that specific investment.
• Nominee Structures: In some cases, Sabertooth holds shares directly on behalf of participating investors rather than through an SPV, simplifying the legal and administrative overhead.

Ernest credits his ability to secure these coveted allocations to his wide professional network and his skill at mobilizing capital quickly. "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. He can typically secure investor capital for a new SPV from family offices on a tight timeline because he has what he calls a "captive set of LPs" (limited partners) who trust his judgment.

What Returns Has Sabertooth Already Delivered?

Sabertooth has already scored a major win with chipmaker Groq, which was licensed and acquired by Nvidia for $20 billion late last year. Two more significant exits are on the horizon: SpaceX's highly anticipated initial public offering is set to begin trading on the NASDAQ this Friday, and Anthropic is expected to go public later this year. These exits are poised to deliver substantial returns for Ernest's investors.

Despite the success, SPVs don't carry the same prestige as traditional venture capital funds. However, Ernest remains confident that his strategy of starting with SPVs and building a solid reputation with family offices, rather than launching an emerging venture fund and competing directly with established players, was the right 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".

What Does This Mean for the Broader AI Investment Landscape?

Ernest's success with Sabertooth reveals a structural inefficiency in venture capital. Smaller institutional investors have capital to deploy but lack the relationships and credibility to access the most sought-after late-stage AI deals. By positioning himself as a trusted intermediary, Ernest has created a business model that serves both sides of that gap.

His ultimate goal is to eventually raise a traditional venture fund, using Sabertooth's strong track record and returns as proof of his investment judgment. That's a difficult task in a crowded market, but the returns from Groq, SpaceX, and Anthropic could provide the kind of track record that limited partners care most about when deciding to back a new fund.

For now, Ernest plans to continue growing his business of raising funds for specific companies on behalf of his dedicated LP base. His approach suggests that as AI companies mature and go public, the infrastructure around accessing private equity in these companies will continue to evolve, creating new opportunities for investors who can bridge the gap between capital and allocation.