Justin Ernest, the founder of Sabertooth Capital, has invested nearly $500 million into high-profile startups over the past year without raising a conventional venture capital fund.
Instead, the former Playground Global investor has relied on special purpose vehicles (SPVs), single-asset funds and nominee structures to connect family offices and smaller institutional investors with fast-growing private companies.
Building a different model
Ernest said he saw strong demand from investors seeking access to leading AI and deep-tech companies but lacking direct entry to those rounds.
Launching a traditional venture fund can take between 12 and 18 months, he said. Rather than waiting, he began securing allocations in later-stage startups and offering those investments individually to a network of roughly 30 institutional investors.
Sabertooth treats each transaction as a separate fund.
Investment vehicles used include:
- Special purpose vehicles (SPVs).
- Single-asset funds.
- Nominee structures, in which Sabertooth holds shares on behalf of investors.
Nearly $500 million invested
Over the last 12 months, Sabertooth has backed 10 companies, including:
- Anthropic.
- Anduril.
- Base Power.
- Databricks.
- PsiQuantum.
- SpaceX.
According to Ernest, the firm writes checks ranging from:
- $10 million
- To $275 million
He said Sabertooth participates only in official financing rounds approved by the companies.
Reputation matters
Family office investors said Sabertooth’s standing with founders and executives distinguishes it from other firms operating in the SPV market.
“Justin is authentically an investor,” said Benjamin Wagner, chief investment officer for a family office overseeing 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.”
Wagner said that when he attempted to invest directly in PsiQuantum, the startup’s chief financial officer recommended investing 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.”
Relying on a network
Ernest, a graduate of Harvard Business School, said his network has become his biggest advantage.
“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.
Because of his existing investor relationships, Ernest said he can quickly assemble capital when new opportunities arise.
“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.”
Traditional fund remains the goal
Although Sabertooth currently focuses on deal-by-deal structures, Ernest said he ultimately hopes to raise a traditional venture capital fund.
Strong returns from SPVs could help establish the track record needed to attract investors.
Sabertooth has already benefited from Groq, which was licensed and acqui-hired by Nvidia for $20 billion last year.
Ernest also expects upcoming public listings, including SpaceX and Anthropic, to provide additional returns.
“I wanted to be in the action,” he said.
“I think this will end up being one of the best vintages of our lifetime.”
TL;DR
Sabertooth Capital founder Justin Ernest has invested nearly $500 million in startups including Anthropic and SpaceX without raising a traditional VC fund. Instead, he uses SPVs and other structures to give smaller institutions access to highly sought-after private companies.
AI summary
- Sabertooth Capital has invested nearly $500 million over the past year.
- Founder Justin Ernest previously worked at Playground Global.
- The firm uses SPVs and nominee structures instead of a conventional VC fund.
- Investments include Anthropic, Anduril, Databricks and SpaceX.
- Ernest ultimately hopes to launch a traditional venture fund.
