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

Last year, Justin Ernest identified a significant gap in the venture capital landscape. Family offices and smaller institutional investors were keen to invest in rapidly growing AI companies but faced challenges in accessing those investment opportunities. With over five years of experience at Playground Global, where he focused on deep tech investments and led fundraising efforts, Ernest believed his extensive network could bridge this gap effectively. Rather than establishing a conventional VC fund—a process he notes can take 12 to 18 months—Ernest leveraged his connections to secure stock allocations in high-profile, later-stage firms. He offers these carefully curated deals to a select group of about 30 smaller institutional investors through special purpose vehicles (SPVs), which function as single-deal funds. Over the past year, his firm, Sabertooth Capital, has successfully deployed nearly $500 million across ten companies, including notable names like Anthropic, Anduril, Base Power, Databricks, PsiQuantum, and SpaceX. Each investment is treated as a distinct fund, with most structured as SPVs, allowing investors to buy shares in a vehicle that owns the stock. Ernest’s checks range from $10 million to $275 million, allowing him to acquire substantial equity stakes while always participating in officially sanctioned funding rounds. While Sabertooth is not the only firm facilitating equity purchases in late-stage startups for family offices, Ernest has quickly amassed significant capital due to his strong reputation in the space. Benjamin Wagner, a CIO for a family office overseeing the wealth of 50 individuals, remarked, "Justin is authentically an investor. He has judgment, expertise, and a technical background that sets him apart from others who often just look to aggregate capital." Wagner’s own experience with PsiQuantum, a quantum computing startup valued at $7 billion, further validated Ernest's credibility when the company’s CFO suggested he invest through Sabertooth, reinforcing his trust in Ernest's legitimacy. As startups like Anthropic and Anduril tighten their policies against unauthorized SPVs, investing through Sabertooth offers smaller limited partners reassurance. They can rest easy knowing their funds are entrusted to a respected investor vetted by the companies themselves. Beyond his technical acumen, the Harvard Business School graduate has developed strong communication skills, which he attributes to overcoming a childhood speech impediment. Ernest describes his networking prowess as his "superpower," allowing him to strategically utilize his connections. He can often secure investor capital for new SPVs swiftly, stating, "I have a captive set of LPs and can usually make four or five calls to know what commitments I can secure." For now, Ernest aims to continue expanding his model of raising funds for specific companies on behalf of his dedicated limited partners. However, he aspires to eventually establish a traditional venture fund. While this is a challenging endeavor, he believes that Sabertooth’s impressive returns through these one-off SPVs will establish a strong track record, which is critical for attracting investors to a new fund. Sabertooth has already celebrated a major success with chipmaker Groq, which was acquired by Nvidia for $20 billion last year. Looking ahead, the highly anticipated IPO of SpaceX this Friday, alongside Anthropic’s expected public listing later in the year, promises to deliver even greater returns for his investors. Although SPVs may not yet carry the same prestige as traditional VC funds, Ernest is confident that his approach—starting with SPVs and cultivating a solid reputation among family offices—is a strategic choice that will pay off. "I wanted to be in the action," he said. "This could end up being one of the best investment vintages of our lifetime."