Situational Awareness — the hedge fund that bet the farm on AI only to see key investments implode last month — was backed by Wall Street and Silicon Valley big-wigs who began to see the writing on the wall before it blew up.
Investing gurus jumped to back Leopold Aschenbrenner, a 24-year-old with no professional investing experience who nevertheless built a $45 billion behemoth that was leveraged heavily on AI bets.
Investors included Neil Mehta, co-founder of venture-capital firm Greenoaks; Dan Sundheim, founder of the hedge fund D1 Capital Partners and a major SpaceX shareholder; the foundation of Gaurav Kapadia, founder of investment firm XN; and Feroz Dewan, the former head of public equities at Tiger Global Management, the Wall Street Journal reported this week.
Some of the fund’s backers grew frustrated before the crisis and even warned Aschenbrenner about the dangers of its high-risk strategy, according to the report.
The fund’s backers were also irked by what they considered to be poor communications and disclosures from the Germany-born Aschenbrenner. Most hedge funds update their investors with performance metrics monthly — but Situational only disclosed its returns quarterly, the report said.
The fund borrowed big to finance its AI bets — which got it into hot water after several of its holdings plummeted last month, prompting investors to ask for their money back.
To keep the fund alive, Situational sold the majority of its public stock portfolio to Ken Griffin’s Citadel.
A hedge fund as big as Situational typically draws on institutional investors like pension plans, university endowments, sovereign-wealth funds and private banks. Situational, by contrast, drew many wealthy individuals in part because institutional investors were apprehensive about dolling out capital to a fund manager with such a scant record, the Journal reported.
Other Situational investors included Stripe co-founders Patrick Collison and John Collison, along with Daniel Gross and Nat Friedman, who lead Meta’s AI efforts.
Aschenbrenner was even able to tap Jane Street, a secretive top-performing investment firm that rarely allocates capital to outside managers.
In a fund document, Aschenbrenner laid out his ambitious — and risky — strategy to investors
“There are no limits on the types of securities in which [Situational Awareness Limited Partnership] may take positions on behalf of its clients, the types of positions that it may take, the concentration of its investments or the amount of leverage that it may use,” he wrote.
Many of the investing gurus — including Jane Street co-founder Rob Granieri, adviser Graham Duncan, a co-founder of East Rock Capital, and Dewan — reportedly attended Aschenbrenner’s wedding last weekend in Carmel, a bougie oceanfront enclave near Monterey Bay, Calif.
Situational was also backed by foundations including the Laniakea Charitable Foundation – whose president and director Matthew Wage is a Jane Street trader, according to the Journal.
Situational also received capital from Good Forever Foundation, a grant-making group focused on AI safety and AI policy.
Aksia, a research and advisory firm to institutions including pensions, family offices and sovereign-wealth funds, met with Aschenbrenner and flagged risk it saw in the young investor, writing in 2025: “may want to be wary of hubris leading to risk management issues, particularly if the use of leverage is indeed significant,” according to a copy of the note viewed by the Journal.
Aschenbrenner launched his hedge fund in 2024 and got off to a hot start picking stocks like memory-chip makers SK Hynix and Sandisk.
The firm vaulted into one of the fastest-growing hedge funds in years, earning Aschenbrenner the nickname “the Nostradamus of AI.”
Despite the recent fall from grace, Situational is up 80% on the year and still holds a portfolio of private investments, including cloud startup Fluidstack, AI chip startup MatX and Anthropic, where it owns a multibillion-dollar stake.
With Situational remaining among the top 50 hedge funds in the US, its prime brokers are standing behind the wunderkind, sources told The Post.
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