Situational Awareness, the $20bn hedge fund founded by former OpenAI employee Leopold Aschenbrenner, has sought to raise fresh capital from investors after suffering heavy losses during the recent rout in AI stocks. The fund held discussions with existing investors and lenders in recent days, with one person describing the talks as ad hoc rather than co-ordinated.

The capital-raising effort comes as the fund has sustained a sharp fall in value amid intense market swings, marking a powerful reversal after posting meteoric returns in the first half of the year. The firm was up 439% on a net basis through June, but several people familiar with its performance said it used borrowing to magnify returns, a strategy that can also amplify losses.

In a July 24 letter to investors, Aschenbrenner acknowledged the fund had "not been immune" to market ructions but argued the sell-off created attractive opportunities. The fund's largest positions, including Oracle and AMD, have fallen about 20% this month, while smaller holdings like Nebius and Sharon AI have dropped further. The tech-heavy Nasdaq 100 has fallen 10% in July.

Aschenbrenner founded the fund after writing an essay titled "Situational Awareness" predicting AI's societal impact. Early investors include Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and trading firm Jane Street. The fund operates with just four investment professionals and eight total employees, while Aschenbrenner has amassed over 250,000 followers on X.