Cerberus Capital Management is raising a $2.5 billion fund to back critical supply chain projects, the latest in a growing number of private investors seeking to profit from U.S. national security goals.
The fund will target all stages of supply chain-related businesses because Cerberus expects a “global resurgence of great power competition that will drive geopolitical tensions,” according to a 34-page presentation the firm provided to potential investors that was seen by Bloomberg.
Cerberus will focus on investing in the same areas President Joe Biden targeted in a recent executive order, including industrial defense, public health, transportation, and energy and minerals, according to the fundraising materials. The fund has raised $863 million so far, according to filings, but the target is $2.5 billion, according to a personal familiar with the company’s plans. Investors will back companies at all stages that have strong government and commercial potential and “benefit from long-term U.S. policy tailwinds,” according to the documents.
A spokesman for Cerberus declined to comment.
By creating a standalone fund, Cerberus joins dozens of other private investors bankrolling startups to support national security interests amid rising U.S. tensions with China and Russia. Despite the larger tech industry downturn, venture investors during the past year have plowed billions into startups focused on everything from satellites to leveraging artificial intelligence in drones. Venture investment in space-related technology startups, for example, increased to $6 billion last year, up from $2 billion five years ago.
Longtime defense investors Peter Thiel’s Founders Fund, 8VC and Lux Capital have been active in the sector, joined by venture investors like former Legendary Entertainment chairman Thomas Tull and more traditional firms, such as Andreessen Horowitz.
That trend appears likely to continue. Andreessen Horowitz said earlier this month it would dedicate $500 million to back more early-stage founders building technologies “that support the national interest.” The focus of the effort, which the firm calls American Dynamism, is on companies that meet that philosophy rather than on a specific sector. It includes many of the same areas Cerberus is now targeting.
For Cerberus, the new fund builds on some previous bets on national security while leveraging the firm’s deep relationships. Cerberus works with or employs many who previously served at the U.S. departments of State, Energy and Homeland Security as well as the nation’s intelligence agencies, including the Central Intelligence Agency and National Security Council, according to the fundraising documents seen by Bloomberg. Former vice president Dan Quayle joined Cerberus in 1999 and remains chairman of its global investments group.
The firm has made at least one investment from the fund so far — a $50 million infusion to mining company Torngat Metals Ltd. to extract rare earth oxides used for low-carbon technologies, including electric vehicles and wind turbines.
Cerberus, based in New York and founded nearly three decades ago, has roughly $60 billion under management in assets, including real estate, credit and private equity. The group has made a handful of defense-related bets over the years including anti-submarine warfare company Sparton Corp., aerospace company Stratolaunch LLC and Electrical Components International, a maker of electrical distribution systems.
