A bigger pool and a new playbook
Disruptive is ditching one-off SPVs for a single, giant pool it can deploy on its own timeline. Founder Alex Davis said the pivot followed more pushback from startup executives who are unhappy that SPVs frequently do not reveal their investors. "The best companies in the world are basically picking who they want to have invest in them," he said.
The new fund is built for concentration, not scattershot bets. As Davis put it, companies are staying private longer, so "we can't write small checks." He added, "You could, but we'd just need to be much earlier and that's not the business we've chosen."
Why this raise stands out
This is a megafund from a small shop. Disruptive has about 30 employees and is based outside the usual venture hubs, which makes it an outlier next to other multi-billion raises this year from Thrive Capital and Andreessen Horowitz. The $10 billion vehicle roughly doubles the firm's total assets under management.
Davis, who started the firm in 2012 and is the grandson of billionaire Marvin Davis, counts sovereign wealth funds, endowments and universities among Disruptive's limited partners. With this capital, the plan is to back 10 later-stage companies with around $1 billion each, mostly in primary financings with some secondary deals.
Portfolio moves and the Nvidia connection
Disruptive's roster includes voice AI startup ElevenLabs, Databricks Inc., and Reflection AI, which Bloomberg News previously reported is in talks with Nvidia Corp. on an investment or acquisition.
In the latter part of last year, Nvidia reached a $20 billion licensing agreement with Groq, a Disruptive portfolio company, and hired much of its team, generating an early return for the firm. Disruptive then financed the remaining Groq entity in a recapitalization that valued it at $3.5 billion.
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Track record and how it invests now
In a letter to limited partners earlier this year, the firm reported distributing over $6 billion on about $1.9 billion invested in startups. Documents indicated that, as of this summer, the net internal rate of return, after fees, was 94%. Disruptive declined to comment on performance.
Davis argues that targeting growth-stage startups gives the firm better odds of big wins. While early-stage investors may back 100 companies hoping a few break out, "we sort of try to be the inverse of that," he said.
What this means for your portfolio
Expect larger checks into a small set of later-stage bets in AI, defense and software. That means more primary funding for companies staying private longer, plus some secondary activity that can help set marks. For investors tracking late-stage private markets, it adds another deep-pocketed buyer operating far from the coasts, with a track record it is confident enough to circulate to LPs.
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