Almost a decade has passed since then Omar Darwazah AND Kyle Hendrick fired AAF management and its first fund of $25 million in 2017.
Rather than race to dramatically increase assets under management, as has been the case with many funds in recent years, partners have deliberately kept fund sizes small, at the same time as their reputations and profits have grown.
Their latest vehicle – a $55 million early-stage hybrid fund called the Axis Fund that recently closed – brings the Washington-based enterprise firm’s total assets to roughly $250 million across 4 funds. The company raised a $39 million investment vehicle in Fund II in 2021 and a $32 million fund of funds investment vehicle in 2017 for a select group of its limited partners.
“Managing a $50 million fund is very different from running a $500 million fund,” general partner Darwazah said in an interview with TechCrunch. “We have noticed that naturally large fund sizes can disrupt the GP-LP alignment as it becomes a function of generating management fees versus generating carry interest, and that is not a game we want to play.”
Unlike typical VC firms that invest directly in start-ups, AAF adopts elements of the fund of funds model, in which, in addition to supporting start-ups, it invests part of its capital in a portfolio of emerging funds.
With its fourth fund, AAF plans to take a position in the first or second funds of emerging managers (typically under $50 million) and their most promising portfolio corporations from pre-seed to IPO, the partners say.
The company allocates roughly 80% of its capital to startups and 20% to emerging funds, combining the two into what it calls a “one-stop capital formation partner” for each founders and fund managers.
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To date, Axis Fund has supported 25 pre-seed and seed-stage enterprise capital funds, in addition to five direct bets on early-stage and growth startups.
“We have found that access to the richest data set on private market companies at their earliest stages over the past decade can only be gained by screening the professional qualifications of emerging managers,” said Hendrick, the firm’s second 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, through its LP-owned funds, AAF has indirect exposure to other unicorns, including Mercury, Deel, Retool, and more recently, artificial intelligence corporations equivalent to Motion, Decagon, and Eleven Labs through its network of seed-fund LP positions at corporations equivalent to Leonis Capital, Wayfinder Ventures, and Quiet Capital (a firm founded by Lee Linden, who is exploring a similar two-pronged strategy with Brian Singerman’s former Founders Fund GP for a recent fund).
The eight-year-old enterprise capital firm claims to have exposure to roughly 800 venture-backed corporations launched between 2021 and 2025 through these managers.
With this approach, AAF focuses less on practical hiring assistance or portfolio company products and more on connecting founders with later-stage capital from its limited partner network. This is a service that becomes especially helpful when a startup begins to lift growth rounds.
“I would say that we typically add the most value to the founder’s journey, especially early-stage, through our venture network,” Hendrick said. “This means we can introduce you directly to 45 active venture capital funds where we are LPs. It’s immediate distribution into their ecosystems.”
At the same time, AAF serves as an intermediary between institutional investors – particularly in the Gulf – who often prefer diversified enterprise exposure without managing dozens of direct relationships.
The fourth fund is backed by Mubadala in Abu Dhabi, several family offices in the U.S., Europe and the MENA region, primary care physicians from leading U.S. asset managers, a multi-billion U.S. enterprise capital firm and a publicly traded company, the company said.
Darwazah and Hendrick got here from different backgrounds to set off. Darwazah, who previously worked in corporate finance and private equity in the Middle East, has spent years connecting Gulf capital with U.S. startups. Hendrick, a former entrepreneur who also worked at the United Arab Emirates Embassy in the U.S. and in the family office in Abu Dhabi, looks at AAF’s earliest deals from an operator’s perspective.
Across its 4 funds, AAF has made 138 direct investments and supported 39 exceptional emerging managers, completing 20 portfolio exits totaling nearly $2 billion.
These exits include TruOptik, MoneyLion, Even Financial, Portfolium, Prodigy, BetterView, Lightyear, Trim, HeyDoctor and Medumo. At least six publicly traded corporations have acquired its portfolio corporations, including TransUnion, Giant Digital, GoodRx and Affirm.
According to data from Cambridge Associates and Carta, this all adds as much as some of the previous fund vintages rating in the top decile in terms of net TVPI for each vintage.
“Our strategy allows us to identify signal from noise and increase the likelihood of supporting outliers – fund returners, 10x cash stocks and seed-to-unicorn investments,” Darwazah said.