How Tiny Mubadala-backed Aaf Is Winning Vc Deals In Some Of The Hottest Startups

It’s been almost a decade since Omar Darwazah and Kyle Hendrick launched AAF Management and its first money of $25 cardinal successful 2017. 

Rather than racing to dramatically summation their assets nether guidance for illustration galore costs person successful caller years, nan partners person intentionally kept their money sizes small, moreover arsenic their estimation and returns person grown. 

Their latest conveyance — a $55 cardinal early-stage hybrid fund, dubbed nan Axis Fund, that precocious closed — brings nan Washington-based task firm’s full assets to astir $250 cardinal crossed 4 funds. The patient raised a $39 cardinal Fund II successful 2021 and a $32 cardinal fund-of-funds finance conveyance successful 2017 for a prime group of its constricted partners.

“Running a $50 cardinal money is very different from moving a $500 cardinal fund,” wide partner Darwazah said successful an question and reply pinch TechCrunch. “We’ve seen that people ample money sizes tin disrupt GP-LP alignment arsenic it becomes a usability of management-fee procreation versus carried-interest generation, and that’s not a crippled we want to play.”

Unlike emblematic VC firms that put straight into startups, AAF is adopting elements of a fund-of-funds exemplary wherever it invests portion of its superior into a portfolio of emerging costs successful summation to backing startups.

With this 4th fund, AAF plans to put successful emerging managers’ first aliases 2nd costs (typically nether $50 million) and their astir promising portfolio companies from pre-seed to pre-IPO, nan partners said.

The patient is allocating astir 80% of its superior to startups and 20% to emerging funds, blending nan 2 into what it calls a “one-stop capital-formation partner” for founders and money managers alike.

So far, nan Axis Fund has backed 25 pre-seed and seed-stage task funds, on pinch 5 nonstop bets connected early-stage and maturation startups.

“We’ve recovered that nan richest dataset of private-market companies astatine nan earliest stages of their statement complete nan past decade is accessed only done LP checks successful emerging managers,” said Hendrick, nan firm’s different wide partner.

This dual money type strategy has granted AAF entree to galore promising startups. The patient is an early investor successful Current, Drata, Flutterwave, Jasper, and Hello Heart.

Similarly, done nan costs wherever it’s an LP, AAF holds indirect vulnerability to different unicorns, including Mercury, Deel, Retool, and much precocious AI firms specified arsenic Motion, Decagon and Eleven Labs done its web of seed-fund LP positions successful firms for illustration Leonis Capital, Wayfinder Ventures, and Quiet Capital (the patient founded by Lee Linden, who is exploring a akin two-pronged strategy pinch erstwhile Founders Fund GP Brian Singerman for a caller fund).

The eight-year-old task patient claims to person vulnerability to astir 800 venture-backed companies launched betwixt 2021 and 2025 done these underlying managers.

L-R: Kyle Hendrick and Omar Darwazah [general partners and managing directors]Image Credits:AAF Management

With this approach, AAF besides focuses little connected hands-on thief pinch hiring aliases merchandise for portfolio companies and much connected connecting founders pinch later-stage superior from its web of constricted partners. That’s a work that becomes particularly adjuvant erstwhile a startup originates raising maturation rounds.

“I’d opportunity wherever we typically adhd nan astir worth to a founder’s journey, particularly successful nan early phase, is done our task network,” said Hendrick. “That intends we tin inject you straight into 45 progressive task costs wherever we’re LPs. It’s instant distribution into their ecosystems.”

At nan aforesaid time, AAF serves arsenic a conduit betwixt organization investors — particularly successful nan Gulf — who often for illustration diversified task vulnerability without managing dozens of nonstop relationships.

Abu Dhabi’s Mubadala, respective U.S., European, and MENA family offices, GPs from starring U.S. plus managers, a multi-billion-dollar U.S. task firm, and a publically traded institution are backing this 4th fund, nan patient said.

Darwazah and Hendrick came to task from different backgrounds. Darwazah, who antecedently worked successful firm finance and backstage equity successful nan Middle East, has spent years bridging Gulf superior pinch U.S. startups. Hendrick, a erstwhile entrepreneur who besides worked astatine nan UAE Embassy successful nan U.S. and astatine a family agency successful Abu Dhabi, brings an operator’s lens to AAF’s earliest deals.

Across its 4 funds, AAF has made 138 nonstop investments and backed 39 unsocial emerging managers, pinch 20 portfolio exits totaling astir $2 cardinal successful aggregate value.

Those exits see TruOptik, MoneyLion, Even Financial, Portfolium, Prodigy, BetterView, Lightyear, Trim, HeyDoctor, and Medumo. At slightest six publically traded companies person acquired its portfolio companies including TransUnion, Giant Digital, GoodRx, and Affirm.

The patient says this each adds up to immoderate of its erstwhile money vintages ranking successful nan apical decile successful position of nett TVPI for their respective vintages, according to Cambridge Associates and Carta data.

“Our strategy allows america to place awesome from sound and summation our probability of backing outliers — money returners, 10x cash-on-cash companies, and seed-to-unicorn investments,” said Darwazah.