It's been almost 10 years since Omar Darwaza and Kyle Hendrick launched AAF Management and its first $25 million fund in 2017.
Rather than compete to dramatically increase assets under management, as many funds have done in recent years, the partners have deliberately kept the size of the fund small despite its growing reputation and returns.
Their latest vehicle, a $55 million early-stage hybrid fund called Axis Fund, recently closed, bringing the Washington-based venture firm's total assets to about $250 million across four funds. The firm raised a $39 million Fund II in 2021 and a $32 million fund of funds investment vehicle in 2017 for a select group of limited partners.
“Running a $50 million fund is very different than running a $500 million fund,” general partner Darwazah said in an interview with TechCrunch. “Of course, we've seen that when a fund is large, the GP-LP alignment can break down as it becomes a function of generating management fees and generating carried interest. That's not the game we want to play.”
Unlike typical VC firms that invest directly in startups, AAF invests a portion of its capital in a portfolio of startup funds, employing elements of the fund-of-funds model to back startups.
With this fourth fund, AAF plans to invest in emerging managers' first or second funds (typically less than $50 million) and their most promising portfolio companies from pre-seed to pre-IPO, the partners said.
The firm allocates about 80% of its capital to startups and 20% to startup funds, merging the two to provide what it calls a “one-stop capital formation partner” for both founders and fund managers.
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So far, Axis Fund has backed 25 pre-seed and seed-stage venture funds and five direct investments in early-stage and growing startups.
“We found that the richest data set for the early stages of private market companies over the past decade is accessed only through LP checks of emerging executives,” said Hendrick, the firm's other general partner.
This dual-fund strategy has given AAF access to many promising startups. The company is an early investor in Current, Drata, Flutterwave, Jasper, and Hello Heart.
Similarly, AAF, through its LP funds, has indirect exposure to other unicorn companies including Mercury, Deel, Retool, and more recently AI companies such as Motion, Decagon, and Eleven Labs. It also holds indirect exposure through a network of seed fund LP positions in companies such as Leonis Capital, Wayfinder Ventures, and Quiet Capital (a firm founded by Lee Linden, who is exploring a two-pronged strategy similar to former Founders Fund GP Brian). new fund Singerman).
The eight-year-old venture firm claims to have exposure to approximately 800 venture-backed companies founded between 2021 and 2025 through these underlying managers.
LR: Kyle Hendrick, Omar Darwaza [general partners and managing directors]Image credit: AAF Management
With this approach, AAF focuses on connecting founders with late-stage capital from its network of limited partners, rather than providing hands-on assistance with portfolio company recruitment and products. This is a particularly useful service once a startup starts raising growth capital.
“I think typically, especially in the early stages, it’s through our venture network that we add the most value to a founder’s journey,” Hendrick said. “That means we can inject you directly into the 45 active venture funds where we are an LP, and you get instant distribution into their ecosystem.”
At the same time, AAF acts as a conduit between institutional investors, especially those in the Gulf region. Institutional investors often prefer diversified venture exposure without managing dozens of direct relationships.
The fourth fund is backed by Abu Dhabi's Mubadala, several US, European and MENA family offices, major US asset management GPs, multi-billion dollar US venture firms and publicly traded companies, the firm said.
Darwaza and Hendrick came to this adventure from different backgrounds. Darwaza previously worked in corporate finance and private equity in the Middle East, where he spent years bridging Gulf capital with U.S. startups. Mr. Hendrick, a former entrepreneur who also worked at the UAE Embassy in the United States and a family office in Abu Dhabi, brings an operator's perspective to AAF's early transactions.
AAF made 138 direct investments across four funds, supported 39 unique emerging managers, and generated 20 portfolio exits totaling approximately $2 billion.
These withdrawals include TruOptik, MoneyLion, Even Financial, Portfolium, Prodigy, BetterView, Lightyear, Trim, HeyDoctor, and Medumo. At least six publicly traded companies have acquired portfolio companies, including TransUnion, Giant Digital, GoodRx, and Affirm.
All of this equates to several past vintages of the fund ranking in the top 10 in terms of net TVPI for their respective vintages, according to data from Cambridge Associates and Carta, the firm said.
“Our strategy allows us to discern the signal from the noise and increase the probability of favoring outliers: fund returners, 10x cash-on-cash companies, and seed-to-unicorn investments,” Darwaza said.