Hedge giant Point72 invests in early military industry! Raised 400 million US dollars to set up a “deterrent fund” and individuals invested more than 100 million dollars

The Zhitong Finance App learned that Point72 Asset Management Company, owned by billionaire Steve Cohen (Steve Cohen), is raising the first venture capital fund for clients and plans to bet on the “urgent” needs of defense technology startups. According to an investor document obtained by Bloomberg, the company is raising 400 million US dollars for the “Deterrence Fund” (Deterrence Fund), mainly investing in seed or Series A financing for startups in the fields of defense, aerospace, energy and security.

Documents and a source familiar with the matter, who did not wish to be named, revealed that Cohen will invest at least 100 million US dollars into the fund with personal funds, and the fund is expected to complete the fundraising in the first half of next year. Point72's representatives declined to comment.

According to the document, the hedge fund believes that compared to large enterprises that are currently slow to act, avoid risk, and are dragged down by bureaucracy, startups can provide more promising technology. But these early-stage companies needed more capital to scale up and meet demand.

Point72 wrote in a recent blog post: “The opportunities for investment in defense technology are not only greater than in 2023, but more urgent. Artificial intelligence, autonomous systems, and software-first systems will redefine modern conflict, and at its core, 'Agile takes priority over scale'.”

Global conflicts, from the Russian-Ukrainian war to the tense situation in the Middle East, have intensified, and countries have drastically increased defense spending. Earlier this year, NATO leaders agreed to increase defense spending after facing criticism from US President Donald Trump. Trump has said that Europe's allies are underinvesting in security.

Point72 mentioned in the blog that modern defense requires new methods of energy production and storage to enable quick and covert operations in conflict zones.

“This is the strength of startups. They usually act quickly, have strong modular construction capabilities, and more and more people have experience at the cutting edge of technology and tasks.”

Although most of Point72's assets are still invested in the open market, the hedge fund has been speeding up the deployment of private equity investments in recent years. In 2021, the company raised about 600 million US dollars for a private equity fund called “Hyperscale”; earlier this year, it began building a new private equity credit business, which will initially be traded using funds from hedge funds.

On the open market side, Point72 manages a $37.7 billion flagship hedge fund, and an artificial intelligence stock selection fund called “Turion,” which is around $1.5 billion.

The “Deterrence Fund” will be part of Point72 Ventures — a division founded in 2016 that mainly invests in early-stage technology companies using Cohen's personal wealth. Up to now, Point72 Ventures has invested $1.4 billion in more than 170 startups.

Documents show that over the past five years, the department has met with nearly 900 defense technology startups and invested in 18 of them, including Shield AI, rocket company Stoke, and autonomous ship manufacturer Saronic. When Point72 Ventures first invested, Shield AI was valued at US$415 million; as of June 30, its post-investment valuation had reached US$5.2 billion.

The amount of a single investment in a “deterrent fund” will be between $1 million and $30 million. According to the document, the fund charges investors 2% of the committed capital as a management fee during the investment period, 2% of the net investment capital after the investment period, and withdraws 20% of the performance share.