Hybrid Venture Strategy Defies Conventional Fund Growth
Washington-based AAF Management is charting an unconventional path in the venture capital landscape by intentionally keeping its fund sizes modest while expanding its reach through a unique hybrid investment model, according to recent reports. The firm, founded by Omar Darwazah and Kyle Hendrick, recently closed its $55 million Axis Fund, bringing total assets under management to approximately $250 million across four funds.
Sources indicate that rather than pursuing dramatic asset growth like many competitors, the partners have deliberately maintained smaller fund sizes. “Running a $50 million fund is very different from running a $500 million fund,” general partner Darwazah stated in an interview, noting that larger funds can disrupt GP-LP alignment by shifting focus toward management-fee generation rather than carried-interest generation.
Dual Approach: Direct Investments and Fund-of-Funds Strategy
AAF’s strategy combines elements of traditional VC investing with a fund-of-funds approach, allocating approximately 80% of capital to direct startup investments and 20% to emerging managers’ first or second funds. This blended model positions the firm as what they describe as a “one-stop capital-formation partner” for both founders and fund managers.
The firm’s other general partner, Kyle Hendrick, explained that “the richest dataset of private-market companies at the earliest stages of their formation over the past decade is accessed only through LP checks in emerging managers.” This insight has shaped their investment thesis and granted access to promising startups that might otherwise remain undiscovered.
Portfolio Reach and Notable Investments
Through its dual strategy, AAF has reportedly gained exposure to numerous high-profile companies. The firm is an early investor in Current, Drata, Flutterwave, Jasper, and Hello Heart. Additionally, through its limited partner positions in emerging funds, AAF holds indirect exposure to other unicorns including Mercury, Deel, Retool, and more recently AI firms such as Motion, Decagon and Eleven Labs.
Analysts suggest this approach has given the eight-year-old venture firm exposure to roughly 800 venture-backed companies launched between 2021 and 2025 through its network of underlying managers. The strategy appears particularly relevant as AI investments in e-commerce and AI video models emerge as breakthrough technologies.
Network Value Over Operational Support
Unlike many venture firms that provide hands-on operational support, AAF reportedly focuses more on connecting founders with later-stage capital from its extensive network of limited partners. Hendrick noted that “where we typically add the most value to a founder’s journey, especially in the early phase, is through our venture network,” enabling instant distribution into 45 active venture funds where AAF serves as an LP.
This network approach comes as other sectors see similar connectivity trends, with healthcare expert networks fueling startup growth and neobanks securing substantial funding despite market challenges.
Global Investor Base and Track Record
The firm’s fourth fund has attracted backing from Abu Dhabi’s Mubadala, several U.S., European, and MENA family offices, GPs from leading U.S. asset managers, a multi-billion-dollar U.S. venture firm, and a publicly traded company. This global investor base reflects growing interest in venture strategies that provide diversified exposure without requiring direct management of numerous startup relationships.
Across its four funds, AAF has reportedly made 138 direct investments and backed 39 unique emerging managers, with 20 portfolio exits totaling nearly $2 billion in aggregate value. These exits include companies acquired by publicly traded firms including TransUnion, Giant Digital, GoodRx, and Affirm. The report states that some of AAF’s previous fund vintages rank in the top decile in terms of net TVPI, according to Cambridge Associates and Carta data.
The firm’s performance comes amid broader market developments, including the resurgence of S&P 500 inclusion premiums and emerging climate solutions like wood vaulting technology attracting investor attention.
Strategic Differentiation in Competitive Market
Darwazah emphasized that their strategy “allows us to identify signal from noise and increase our probability of backing outliers — fund returners, 10x cash-on-cash companies, and seed-to-unicorn investments.” This focus on statistical outliers rather than broad market coverage represents a nuanced approach to venture capital that contrasts with the conventional wisdom of scale-driven growth.
The partners’ diverse backgrounds reportedly contribute to their unique perspective. Darwazah previously worked in corporate finance and private equity in the Middle East, while Hendrick is a former entrepreneur who worked at the UAE Embassy in the U.S. and at a family office in Abu Dhabi, bringing complementary experiences to their investment decisions.
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