Cerberus Capital Management, the private equity and credit behemoth known for snapping up stakes in struggling companies, is raising its first dedicated venture fund.
The startup-focused vehicle, Cerberus Venture One, plans to deploy capital from seed to Series B rounds, according to regulatory filings. The fund’s strategy revolves around real-world hardware assets—ranging from startups seeking US defense contracts to AI, quantum computing, supply chain and fusion energy technologies.
Two people familiar with the matter, who were granted anonymity to discuss confidential business dealings, confirmed the fundraise. A spokesperson for Cerberus, which has $65 billion in assets under management, declined to comment.
Prominent managers have drummed up interest in defense investment as geopolitical strife grows. Cerberus’ strategy is broad, encompassing industrial technology and its spin on the “American Dynamism” playbook popularized by Andreessen Horowitz, one of the people said. A16z is targeting manufacturing, education and supply chain plays as well as military bets.
Cerberus’ early-stage arm is helmed by global head of venture investments Chris Darby. Darby joined the New York-based firm in 2023 from In-Q-Tel, the strategic investment arm of the US intelligence community.
The fundraising target and launch timing for Cerberus Ventures One wasn’t immediately clear.
Darby’s remit in the VC unit is to invest in technology that increases national security, both for the US and its allies. Biotech investor Chenny Zhang, formerly a principal at In-Q-Tel, joined Cerberus as a director in April, according to her LinkedIn page.
Defense dollars
Investors have been closely eyeing the defense tech market, where the successes of companies like Palantir and Anduril have amped up interest from previously reluctant players.
Cerberus’ fund is a vote of confidence in the venture strategy by a sizable investment manager that has historically not focused on the asset class. In March, Cerberus Ventures led a $25 million Series A for quantum infrastructure company Maybell Quantum at an undisclosed valuation.
Founded in 1992 by now-billionaire Steve Feinberg, Cerberus runs real estate and credit strategies in addition to its PE investments. Feinberg also founded Tracker Capital, a family office independently making venture bets in emerging technologies, in 2017.
Last year, Cerberus zeroed in on national security-related investments with a fund to back critical supply chain projects that targeted $2.5 billion, Bloomberg reported.
‘Innovations that spawn a cascade’
The sprawling asset manager has been building out Cerberus Technology Solutions, an affiliate working to develop and deploy generative AI applications to portfolio companies and to bolster its in-house investment technologies.
Cerberus’ peers—crossover investors like Coatue and Tiger Global—were badly burned by the valuations reset in 2022. Darby is publicly bullish on today’s venture market. “It’s a hard time to get a [venture] fund raised, but If you’re sitting on dry powder, there’s never been a better time [to invest],” he said during a panel at the 2024 Milken conference in May.
Though its venture vehicle plans to invest in companies with demonstrated market fit and to take board seats, Cerberus said in disclosures that it will also “occasionally make passive and minority investments in seed stage companies.” Darby took a board seat at Maybell Quantum earlier this year.
“There are certain technology innovations that spawn a cascade,” Darby said at Milken, pointing to advancements in AI, nuclear energy and gene therapies. “With Cerberus Ventures, what we’re doing is we’re redefining national security.”
Related read: Global Private Market Fundraising Report
Featured image by Timothy A. Clary/AFP via Getty Images
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