AAF Raises $55 Million to Back Early-Stage Startups and Emerging Fund Managers

AAF Management Ltd. has announced the close of a new $55 million hybrid fund, The Axis Fund, aimed at investing in early-stage startups and emerging venture fund managers. The fund, which brings AAF’s total assets under management to about $250 million, is anchored by Mubadala Capital alongside a mix of family offices, established U.S. and European general partners, a major U.S. venture firm, and a publicly traded company.

AAF describes the Axis Fund as a hybrid vehicle that blends direct startup investments with limited partner commitments into emerging fund managers. About 80% of the fund’s capital will be deployed directly into startups, ranging from pre-seed to pre-IPO stages, while the remaining 20% will go into early-stage funds managed by new or rising venture capitalists.

A Hybrid Model for a Fragmented Market

The hybrid structure isn’t new in theory, but few firms have executed it at scale. AAF believes this model gives it a distinct edge: early visibility into promising startups before they appear on databases like Crunchbase or PitchBook. By backing smaller funds, AAF gains access to what it calls “gated private market data”, deal flow that is still below the industry radar.

This approach also helps AAF diversify its exposure. Instead of betting only on individual startups, it spreads its risk across fund portfolios while maintaining the flexibility to invest directly in standout companies sourced from those networks.

Who’s Behind AAF and Why It Matters

Founded in 2016, AAF has become one of the quiet players shaping early-stage venture capital globally. The firm has invested in more than 130 startups and 40 emerging managers across over 40 fund vintages. Its portfolio includes five unicorns, Flutterwave, Drata, Hello Heart, Current, and Jasper, and over 20 exits collectively valued at around $2 billion.

The firm’s strategy is built on small, tightly focused fund structures. Omar Darwazah, one of AAF’s general partners, has previously argued that massive venture funds often misalign incentives, prioritizing management fees over real returns. By keeping fund sizes smaller, AAF aims to stay disciplined and performance-driven.

Mubadala’s Strategic Anchor Role

The backing from Mubadala Capital, the investment arm of Abu Dhabi’s sovereign wealth fund, is particularly notable. It signals growing interest from Middle Eastern institutional capital in global early-stage venture. For AAF, Mubadala’s support provides both validation and financial strength, helping it compete for deals in increasingly crowded startup rounds.

This relationship also reflects a larger trend: Middle Eastern investors are diversifying their portfolios beyond traditional energy and infrastructure plays, focusing instead on technology, AI, and fintech ecosystems that can deliver long-term innovation exposure.

Implications for Startups and Fund Managers

For startups, AAF’s hybrid model offers more than just a capital injection. It creates a bridge between founders and a network of new fund managers who are closer to local ecosystems and niche markets. This setup can help surface underrepresented talent and startups outside typical VC circles.

For emerging fund managers, the Axis Fund is a lifeline. Securing anchor LPs is one of the hardest challenges for first-time funds. AAF’s commitment gives these managers not just capital, but validation in front of future institutional investors.

A Measured Bet in a Changing Venture Landscape

Hybrid investing is still an evolving strategy in venture capital. While it offers diversification and access advantages, it also brings complexity. Balancing direct startup bets with fund LP commitments requires meticulous operational discipline and a deep network to manage conflicts of interest and information flow.

Still, AAF’s approach reflects a growing recognition in venture capital: that innovation is increasingly decentralized, and that capital providers must evolve to find and back talent wherever it emerges, whether in Silicon Valley, Lagos, or Dubai.

With $55 million in fresh firepower and institutional backing, AAF’s new fund positions it as one of the few hybrid venture firms bridging both startup founders and the fund managers of tomorrow.