How Sabertooth Capital bypasses traditional VC funds to back startups

Justin Ernest noticed a gap in venture capital access for family offices and smaller institutional investors who wanted to invest in startups but could not access their cap tables (capitalization tables). Instead of waiting to raise a traditional fund, Ernest launched Sabertooth Capital. According to Ernest, the firm has deployed nearly $500 million into 10 companies. Rather than managing a single pool of capital, Sabertooth treats each deal as an individual fund. Its portfolio includes:

• Anthropic
• Base Power
• Databricks
• PsiQuantum
• SpaceX

Ernest, the founder of Sabertooth Capital, said: “I wanted to be in the action. I think this will end up being one of the best vintages of our lifetime.”

To secure these allocations, Ernest bypasses the traditional fundraising process. Launching a formal venture capital fund reportedly takes new managers anywhere from 12 to 18 months. Instead, Sabertooth utilizes SPVs (Special Purpose Vehicles), single-asset funds, and nominee structures—where the firm holds shares on behalf of participating investors rather than through a standard vehicle. This setup allows Ernest to write checks ranging from $10 million to $275 million by pooling capital from about 30 smaller institutional investors.

This model has allowed Sabertooth to establish a reputation within the shady world of small allocations and SPVs targeting family offices. While many competitor groups are viewed as fly-by-night organizations, Ernest has built trust through his technical judgment. Benjamin Wagner, a CIO (Chief Investment Officer) for a family office managing the wealth of 50 individuals, noted that Ernest’s technical judgment and expertise distinguish him from other organizations that merely attempt to aggregate capital. For example, when Wagner sought to invest directly in the quantum computing startup PsiQuantum—which was last valued at $7 billion—the company’s CFO suggested that he invest through Sabertooth.

Sabertooth’s strategy has already yielded results. Late last year, the chipmaker Groq was licensed and acqui-hired (an acquisition primarily for talent rather than products) by Nvidia for $20 billion. Looking ahead, the firm’s investors are anticipating SpaceX’s IPO this Friday. While Ernest intends to eventually raise a traditional venture fund, he plans to continue using these vehicles to build a track record. He relies on a network of LPs (Limited Partners) to commit capital, noting that he can typically secure commitments with just a few phone calls.

Why it matters

Sabertooth Capital provides family offices and smaller institutional investors access to late-stage startup cap tables through SPVs and nominee structures, bypassing the need for traditional VC funds.