How tiny Mubadala-backed AAF is winning VC deals in some of the hottest startups

Nearly ten years ago, Omar Darwazah and Kyle Hendrick founded AAF Management, launching their first fund of $25 million in 2017. Unlike many venture capital firms that rush to significantly expand their assets, AAF has opted for a more measured approach, focusing on maintaining smaller fund sizes while enhancing their reputation and returns. Their latest initiative, the Axis Fund, has successfully closed at $55 million, increasing AAF's total assets to around $250 million across four funds. This follows a $39 million Fund II raised in 2021 and a $32 million fund-of-funds established in 2017 for a select group of limited partners. In an interview with TechCrunch, Darwazah explained, "Running a $50 million fund is very different from running a $500 million fund." He emphasized that larger fund sizes can disrupt the alignment between general partners (GPs) and limited partners (LPs), as it shifts the focus towards management fees rather than carried interest, a dynamic AAF chooses to avoid. Distinct from conventional VC firms that directly invest in startups, AAF employs a fund-of-funds strategy. This allows them to allocate a portion of their capital into emerging funds, while also supporting startups. With the Axis Fund, AAF aims to invest in the first or second funds of emerging managers, typically those under $50 million, alongside promising portfolio companies ranging from pre-seed to pre-IPO stages. Currently, about 80% of the Axis Fund’s capital is directed towards startups, with the remaining 20% invested in emerging funds. This hybrid model positions AAF as a comprehensive capital-formation partner for both founders and fund managers. To date, the Axis Fund has invested in 25 pre-seed and seed-stage venture funds and made five direct investments in early-stage and growth companies. Hendrick noted, "The richest dataset of private-market companies at the earliest stages over the past decade is accessed only through LP checks in emerging managers." This innovative strategy has allowed AAF to engage with many promising startups, including early investments in companies like Current, Drata, Flutterwave, and Jasper. Moreover, through its LP positions, AAF has indirect exposure to various unicorns, such as Mercury, Deel, and Retool, as well as AI firms like Motion, Decagon, and Eleven Labs. The firm claims access to around 800 venture-backed companies established between 2021 and 2025 through its network of emerging managers. AAF's focus is not just on hands-on assistance with hiring or product development but rather on connecting founders with later-stage capital through its expansive network of limited partners. Hendrick stated, "We can inject you directly into 45 active venture funds where we’re LPs, providing instant distribution into their ecosystems." The firm also acts as a bridge for institutional investors, particularly those in the Gulf region, who seek diversified venture exposure without the burden of managing numerous direct relationships. Backing for the fourth fund includes significant players such as Abu Dhabi’s Mubadala, various family offices from the U.S., Europe, and MENA regions, as well as leading asset management firms and a publicly traded company. Darwazah and Hendrick bring diverse backgrounds to the venture capital space. Darwazah has experience in corporate finance and private equity in the Middle East, while Hendrick, a former entrepreneur, also worked at the UAE Embassy in the U.S. Their combined expertise has allowed AAF to make 138 direct investments and support 39 unique emerging managers across its four funds. Notably, AAF has achieved 20 portfolio exits, with an aggregate value nearing $2 billion, including companies like TruOptik, MoneyLion, and GoodRx. Their strategic approach has resulted in some fund vintages ranking in the top decile for net TVPI, as reported by Cambridge Associates and Carta data. Darwazah concluded, "Our strategy allows us to identify signal from noise and increase our probability of backing outliers — fund returners, 10x cash-on-cash companies, and seed-to-unicorn investments."