Disruptive Closes $10 Billion Megafund for AI, Defense Startups

Disruptive, a 15-year-old investment firm based in Dallas, has raised a $10 billion fund to back more AI, defense and software startups.

The new megafund effectively doubles Disruptive’s total assets under management. It also shifts the firm from raising single special-purpose vehicles from its limited partners on a deal-by-deal basis to managing a single fund to back startups at its own discretion.

Disruptive founder Alex Davis said he wanted to make the change after noticing an uptick in startup executives frustrated with the way special purpose-vehicles often fail to disclose who’s backing them. “The best companies in the world are basically picking who they want to have invest in them,” he said.

While Thrive Capital and Andreessen Horowitz have also raised megafunds of billions of new investment capital this year, Disruptive is an outlier both because of its small size and its location outside of major startup hubs. The firm employs a staff of around 30 people.

With the new fund, Disruptive said it plans to back 10 later-stage companies, investing around $1 billion into each. The firm aims to mostly pour its capital into primary raises, although it will participate in some secondary offerings as well.

“The market is getting such that to make an impact in some of these companies staying private longer, we can’t write small checks,” he said. “You could, but we’d just need to be much earlier and that’s not the business we’ve chosen.”

Davis, the grandson of oil tycoon and billionaire Marvin Davis, founded the firm in 2012. Disruptive’s backers are sovereign wealth funds, endowments and universities. Its portfolio companies include voice AI startup ElevenLabs, enterprise data company Databricks Inc. and open-weight model maker Reflection AI, which is discussing an investment or acquisition deal with Nvidia Corp., Bloomberg News previously reported.

Late last year, Nvidia struck a $20 billion licensing deal with Disruptive portfolio company Groq and hired much of its talent, netting an early return for the VC firm. Disruptive backed the remaining company in a recapitalization process that valued Groq at $3.5 billion.In a letter to limited partners sent earlier this year, the firm stated that it had returned more than $6 billion in capital on about $1.9 billion invested into startups, according to documents seen by Bloomberg News. The firm had a net internal rate of return of 94% after fees as of this summer, according to the documents.

Disruptive declined to comment on returns.