How Justin Ernest invested nearly $400M 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 startups like Anthropic, Anduril, and SpaceX.
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, Base Power, Databricks, PsiQuantum, and SpaceX, according to Ernest. 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.
