Justin Ernest’s $400M Bet on Hot Startups Without a VC Fund

Last year, Justin Ernest spotted a critical flaw in how venture capital operates. Family offices and smaller institutional investors were eager to back the fastest-growing AI companies, but they simply could not get a seat at the table.

With more than five years at Playground Global investing in deep tech and leading fundraising efforts, Ernest knew his relationships with both investors and founders could close that gap. Rather than launching a traditional VC fund , a process he says can take new managers 12 to 18 months , he leveraged his network to secure stock allocations in high-profile, later-stage companies. He then offers these individual deals to roughly 30 smaller institutional investors through special purpose vehicles (SPVs), which function as single-deal funds.

Over the past 12 months, his firm Sabertooth VC has deployed nearly $400 million into 10 companies, including Anthropic, Anduril, Databricks, PsiQuantum, and SpaceX. Each deal is treated as its own separate fund, typically structured as an SPV, where investors buy shares in the vehicle that holds the stock.

Ernest writes checks ranging from $10 million to $275 million, securing significant ownership stakes, and always participates in official, company-approved funding rounds.

Sabertooth is not alone in offering family offices access to equity in high-profile late-stage startups. But Ernest quickly raised substantial capital because, in the often opaque world of small allocations and SPVs, he has built a strong reputation.

“Justin is authentically an investor,” said Benjamin Wagner, a CIO for a family office managing wealth for 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 he invest through Sabertooth instead.

“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.”

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

Beyond technical expertise, the Harvard Business School graduate sharpened his communication skills after largely overcoming a childhood speech impediment. Ernest credits his ability to secure stock allocations in coveted tech companies to his wide network.

“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 raise investor capital for a new SPV from family offices on a tight timeline.

“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.”

For now, Ernest wants to keep growing his business of raising funds for specific companies on behalf of his dedicated LP base. But his ultimate goal is to eventually raise a traditional venture fund. That is a tough challenge, but he believes Sabertooth’s strong returns from these one-off SPVs will prove his track record , the factor investors care about most when backing a new fund.

He is already making progress. Sabertooth has seen one major return from chipmaker Groq, which was licensed and acqui-hired by Nvidia for $20 billion late last year. Next up is SpaceX’s highly anticipated IPO this Friday, along with Anthropic’s expected public listing later this year. Both could deliver an even greater windfall for his investors.

SPVs do not carry the same prestige as traditional VC funds. But Ernest remains confident that starting with them and earning a solid reputation with family offices, rather than launching an emerging venture fund and competing head-on, was the right strategic 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.”