Situational Awareness, the hedge fund whose aggressive AI bets soured badly in July, is backed by a formidable lineup of Silicon Valley and Wall Street investors who put their faith in a 20-something founder with no prior professional investing experience. Among the fund's investors are Dan Sundheim, founder of D1 Capital Partners; Silicon Valley investor Neil Mehta, co-founder of Greenoaks; the foundation of Gaurav Kapadia, founder of XN; and Feroz Dewan, former head of public equities at Tiger Global Management. Those investors and others signed up for the vision of Leopold Aschenbrenner, age 24, who managed to build a $45 billion investing powerhouse at the center of the AI trade.

The fund borrowed heavily to finance its AI bets and scrambled to raise cash last month after several holdings plunged, triggering demands from lenders. Ultimately, Situational sold the bulk of its public stock portfolio to Citadel, led by Ken Griffin. Some backers had warned Aschenbrenner about the risks of leverage and were frustrated by what they viewed as his lack of communication and disclosure.

Unlike typical hedge funds of its size, which are dominated by institutional investors, Situational's base includes many wealthy individuals, partly because institutions were wary of allocating capital to a fund manager without a track record.