AI Hedge Fund Founder Faces $35 Billion Loss, Seeks New Capital Amid Silicon Valley Interest

Leopold Aschenbrenner, a 25-year-old former OpenAI employee, saw his AI hedge fund, Situational Awareness, decline from a peak of roughly $45 billion in early July to about $10 billion by late July after leveraged positions on AI infrastructure stocks were forced into margin calls. The fund, which required a minimum $25 million buy-in, had backing from investors such as Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and major banks including JPMorgan, Goldman Sachs and Bank of America.

The fund’s strategy involved up to 400 % leverage on a concentrated portfolio that was long on companies including Nebius Group, SanDisk, CoreWeave and SK Hynix, while shorting Adobe. A sharp sell-off in AI-linked equities, including a 17.98 % drop in Nebius, triggered collateral calls. Aschenbrenner sold most of his public-equity holdings to Citadel at an estimated 10 % discount, preserving private stakes in Anthropic, Fluidstack and MatX. The losses occurred days before his scheduled wedding in Carmel, California.

By early August, the fund was fielding requests for fresh capital, though Aschenbrenner told limited partners that no new money would be accepted at present. Nonetheless, the fund announced a $400 million investment in an undisclosed private company, following a $100 million stake taken the previous month. In a letter to investors, he wrote, "We took the steps that were necessary to fight another day. Our fund must always be structured such that we can take a loss and fight another day. I will make it my mission to ensure that we learn the necessary lessons from this experience."

Redpoint Ventures partner Logan Bartlett said there is a “movement rallying around Leopold Aschenbrenner,” reflecting a broader Silicon Valley tendency to value conviction about technology direction even after significant losses. Critics note that Aschenbrenner had no prior experience managing institutional capital and that the fund’s high leverage on a narrow, volatile set of AI stocks created a structural mismatch, especially given the illiquid private holdings that cannot be liquidated to meet margin calls. Retail investors who copied the fund’s trades experienced the drawdown without access to the private-equity upside.

The next quarter will reveal whether Situational Awareness reopens to outside capital, a development that could validate Silicon Valley’s willingness to back conviction over track record, or serve as a cautionary example of mixing venture-style bets with high-leverage strategies.