Alex Davis recently raised $10 billion and plans to invest it in about 10 companies, with checks of up to $1 billion each. He’s doing it from Dallas, with a team of about 30 people and a firm, Disruptive, that has stayed out of the spotlight until now.
The new $10 billion fund puts Disruptive alongside the giants of tech investing, including Thrive Capital’s $10 billion-plus raise this year, split between early and growth investments, and Andreessen Horowitz’s $15 billion-plus haul across multiple funds at the start of this year.
Return data I’ve seen for Disruptive shows more than $6 billion returned on about $2 billion invested, alongside a reported historical net IRR of 94.1 percent. Davis’s public investments include Reflection AI, ElevenLabs, Shield AI, Databricks, and Helsing, with earlier bets on Palantir, Airbnb, and Spotify.
Davis grew up learning business from his grandfather, Marvin Davis, the oil billionaire who once owned 20th Century Fox. He attended Northwestern, worked at the Chicago Mercantile Exchange, and dropped out of college after his grandfather died. A 2017 profile traced his path from real estate into private tech deals, with Palantir becoming a defining investment.
Davis isn’t just an investor. He’s now also running Groq as executive chairman, building an inference cloud after its $20 billion licensing deal with Nvidia. Groq announced $350 million in funding in August and said it was operating 13 data centers.
I recently sat down with Davis at Disruptive HQ in Dallas for his first-ever podcast interview to understand how he picks the companies worth a billion-dollar check. We discuss why he doubled down on Palantir before it went public, the opportunities he sees in open-weight AI models, compute, and defense, and who he thinks could get burnt in the AI boom.
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Episode highlights
His $10 billion fund is built around the idea that AI’s winners will need much bigger checks. Davis sees openings in US open-weight models, companies that can deliver compute, and defense businesses challenging the established contractors. As the strongest companies stay private longer, he sees “an unfair advantage for us to gather a lot of capital” and concentrate it in those businesses. He wants to back companies that already have the talent, technology, and position to pull further ahead. That means being willing to pay higher valuations for the companies he thinks are winning.
He predicts pain for many people rushing to build data centers. He’s wary of developers borrowing heavily to build data centers without understanding the financing, construction timelines, and changing chip economics. “I could see a lot of people getting hurt putting a lot of debt on these projects,” he tells me. He’s also worried about investment vehicles promising access to hot private companies, saying brokers have even tried to sell him shares his firm already owns. He fears that companies staying private for years can hide money that was never actually invested. He’s clear he doesn’t have a concrete example of fraud, but he thinks investors should pay attention.
He wants AI to make his 30-person firm more capable without replacing its people. “I don’t want an AI culture,” he tells me. He expects employees to use the tools, but describes Disruptive as a relationship business and says he won’t shrink the team because of AI. He also wants the firm’s economics tied to investment performance: “I don’t think anybody should get rich on management fees.” When a portfolio company struggles, he instinctively spends more time trying to save the investment. And writing checks 10 times as large, he argues, doesn’t require 10 times as many people.
ICYMI
Sources is a newsletter and podcast by Alex Heath about the AI race, featuring conversations with leading founders and technologists. Every week, Sources reaches the inboxes of thousands of decision-makers in tech, finance, policy, and media.
