Braidwell, Karnal and Kreiter's AI healthcare fund, surged 28% last year

By Anirban Sen

NEW YORK, March 11 (Reuters) - Braidwell, an investment firm that was launched by former Deerfield Management executive Alex Karnal and former Bridgewater Associates COO Brian Kreiter, is looking to double down on its bets on AI-focused biopharmaceutical companies this year, after posting ‌a robust 28% return last year in its hedge fund arm.

The Stamford, Connecticut-based firm, which has made AI a centerpiece of its investment strategy, was among a handful of big hedge fund launches following the COVID-19 pandemic, raising $3.5 billion in early 2022. Since then, Braidwell has backed biotechnology, pharmaceutical, and medical device companies, the company said in a recent letter to investors seen by Reuters.

Cancer testing firm Guardant Health GH.O, medical device maker Alphatec ATEC.O, and molecular diagnostics company Caris Life Sciences CAI.O were among its big winners last year, Karnal and Kreiter said in the letter. At the end of the December quarter, the Braidwell Partners Fund had roughly $3.1 billion of assets under management.

Braidwell operates across three main areas. Its flagship Braidwell Partners Fund invests in public company stocks and bonds, while its private credit arm Braidwell Credit provides direct loans to healthcare companies. It also operates an incubator for early-stage healthcare ventures called Braidwell Labs.

"We expect 2026 to show some incredible opportunities at the intersection of AI and Bio," said Kreiter. "You will likely see us build or back both AI-enabled medicine companies as well as companies that are developing platforms and tools that will be used by medicine makers."

The hedge fund reported a 49.5% jump in total gross performance during the 2023-2025 period, according to Braidwell. Its flagship fund rose 28% on a gross basis and 21% on a net basis last year, roughly in line with broader life sciences indices, which on average rose between 27% and 35% last year. Braidwell's performance was largely boosted by the fund's bets on non-therapeutic ventures.

Karnal, who currently serves as Braidwell's chief investment officer, spent about 16 years at Deerfield, a healthcare-focused investment firm. Karnal has also co-founded a nonprofit called the Institute for Life Changing Medicines with gene-therapy pioneer James Wilson.

Kreiter served as an assistant to the Mayor of Chicago before a nearly 13-year stint at hedge fund giant Bridgewater.

IDEA FROM PANDEMIC YEARS

Karnal and Kreiter have been building their investment platform since 2022, aiming to blend traditional Wall Street-style investing with medical science and AI.

The firm's roughly 40-person team comprises molecular biologists, biostatisticians, commercial analysts, AI engineers, and portfolio managers. Karnal and Kreiter, who had known each other for several years, developed the idea of launching Braidwell in earnest during the COVID-19 pandemic.

Since its founding, Braidwell has backed early-stage AI-biology companies, including Lila Sciences that is attempting to build an AI solution that can run thousands of parallel experiments, and Proxima, which uses AI to design a new class of medicines that work by forcing proteins to interact with each other.

Kreiter, who at the time was still at Bridgewater, had started to develop an early natural-language AI model, having put together a team of engineers who had helped build and develop IBM's Watson computer system. The two founders started to discuss ideas on potential healthcare solutions that could be built for the larger population that was attempting to emerge from the pandemic.

One of their early software products was used by the NFL to help run the Super Bowl that year. The NFL did not return a request for comment.

“We built Braidwell to be both a builder and a supporter of the health companies the world needs. Across equity, credit, and venture, we back innovators pushing medicine and AI forward, and we use AI in our own investment process to help identify the medicines that should exist but don’t yet. Through Braidwell Labs we go a step further, combining AI and science to discover those medicines and build the companies that bring them to life," Karnal said in an interview.