AAF Ventures: Mubadala's VC Firm Securing Top Startup Deals

AAF Management's Strategic Growth and New Fund Launch

Omar Darwazah and Kyle Hendrick established AAF Management nearly a decade ago, initiating their venture with a $25 million fund in 2017.

In contrast to many firms focused on rapid asset accumulation, the partners at AAF have deliberately maintained smaller fund sizes. This approach has continued despite growing recognition and strong investment returns.

The Axis Fund and Total Assets

Their most recent investment vehicle, the $55 million Axis Fund, has recently been finalized. This brings the total assets under management for the Washington-based venture firm to approximately $250 million across four distinct funds.

Previously, the firm secured a $39 million Fund II in 2021 and a $32 million fund-of-funds investment in 2017, specifically for a select group of limited partners.

A Different Approach to Fund Size

“The operational dynamics of a $50 million fund differ significantly from those of a $500 million fund,” explained Darwazah in a discussion with TechCrunch. “We’ve observed that larger fund sizes can sometimes compromise the alignment between general partners and limited partners, shifting the focus from carried-interest generation to management-fee generation – a dynamic we intentionally avoid.”

Hybrid Investment Strategy

AAF distinguishes itself from conventional venture capital firms by incorporating elements of a fund-of-funds model. This involves investing in a portfolio of emerging funds alongside direct investments in startups.

The fourth fund will be used to invest in the first or second funds of emerging managers (typically under $50 million) and their most promising portfolio companies, spanning from pre-seed to pre-IPO stages.

Capital Allocation and Partnership Role

The firm intends to allocate around 80% of its capital to startups and the remaining 20% to emerging funds. This blend positions AAF as a comprehensive “one-stop capital-formation partner” for both founders and fund managers.

To date, the Axis Fund has invested in 25 pre-seed and seed-stage venture funds, as well as making five direct investments in early-stage and growth startups.

Accessing Early-Stage Data

“Our research indicates that the most valuable data regarding private-market companies in their initial phases is accessible through limited partner investments in emerging managers,” stated Hendrick, the firm’s other general partner.

Portfolio Companies and Network Effects

This dual fund strategy has provided AAF with access to numerous promising startups. The firm is an early investor in companies like Current, Drata, Flutterwave, Jasper, and Hello Heart.

Furthermore, through its fund-of-funds investments, AAF has indirect exposure to unicorns such as Mercury, Deel, Retool, and recent AI ventures including Motion, Decagon, and ElevenLabs. This is facilitated by its network of seed-fund limited partner positions in firms like Leonis Capital, Wayfinder Ventures, and Quiet Capital.

Broad Market Exposure

Through its underlying managers, the eight-year-old venture firm reports exposure to approximately 800 venture-backed companies launched between 2021 and 2025.

Focus on Network and Capital Connections

AAF prioritizes connecting founders with later-stage capital through its network of limited partners, rather than providing extensive hands-on operational support. This service proves particularly valuable as startups seek growth funding.

“Our primary contribution to a founder’s journey, particularly in the early stages, lies in our venture network,” explained Hendrick. “We can directly connect them with 45 active venture funds where we are limited partners, providing immediate access to their ecosystems.”

Serving Institutional Investors

AAF also functions as a bridge between institutional investors – particularly those in the Gulf region – and diversified venture exposure, eliminating the need for managing numerous direct relationships.

Investor Base

The fourth fund’s investors include Abu Dhabi’s Mubadala, several U.S., European, and MENA family offices, general partners from leading U.S. asset managers, a multibillion-dollar U.S. venture firm, and a publicly traded company.

Founders' Backgrounds

Darwazah and Hendrick bring diverse backgrounds to venture capital. Darwazah’s experience includes corporate finance and private equity in the Middle East, focusing on connecting Gulf capital with U.S. startups. Hendrick, a former entrepreneur with experience at the UAE Embassy and a family office, offers an operator’s perspective to AAF’s early-stage investments.

Investment Performance and Exits

Across its four funds, AAF has completed 138 direct investments and backed 39 emerging managers, resulting in 20 portfolio exits with a combined value of nearly $2 billion.

These exits include Tru Optik, MoneyLion, Even Financial, Portfolium, Prodigy, Betterview, Lightyear, Trim, HeyDoctor, and Medumo. At least six publicly traded companies have acquired its portfolio companies, including TransUnion, Giant Digital, GoodRx, and Affirm.

Fund Performance Metrics

The firm reports that its previous fund vintages rank within the top decile in terms of net TVPI, according to data from Cambridge Associates and Carta.

“Our strategy enables us to discern valuable opportunities from market noise and enhance our ability to support exceptional companies – those delivering strong fund returns, achieving 10x cash-on-cash returns, and scaling from seed stage to unicorn status,” concluded Darwazah.