Thrive Capital Raises $5 Billion for Venture Funds on Heels of AI Boom
Thrive Capital, a New York-based venture capital firm founded by Josh Kushner, has successfully raised $5 billion for its latest pair of venture-capital funds. This fundraising achievement, announced on Sunday, marks the firm’s largest-ever and is among the biggest completed by a venture firm this year. The new funds come at a time when the venture capital industry is navigating the resurgence fueled by the AI boom.
Riding the AI Wave
Thrive Capital has gained prominence in Silicon Valley, especially due to its close relationship with OpenAI, the maker of ChatGPT. Thrive first invested in OpenAI in April 2023, and has since poured hundreds of millions of dollars into the AI startup. This strategic investment in AI has positioned Thrive as a key player in the sector, further attracting interest from other AI startups like Scale AI. Additionally, Thrive's investment portfolio includes non-AI firms such as the acclaimed movie studio A24.
The Fundraising Context
The recent $5 billion fundraising haul by Thrive is seen as a bold bet on the future of the venture-capital industry, which has been struggling since the tech crash of two years ago. Interest rate hikes had previously dried up funding, causing many startups to scale back or shut down. This period also saw a sluggish IPO market and increased antitrust scrutiny that dampened acquisitions, making successful exits rare and difficult for venture investors.
Despite these challenges, the excitement around AI has led to a resurgence of interest in venture capital. AI is touted by many venture capitalists as a transformative technology, comparable to the internet in its impact. This has led to an investment frenzy, with AI startups often securing funding even before having a solid business plan. Major venture firms like Andreessen Horowitz and Benchmark have also rebranded some of their funds to reflect a renewed focus on AI technology.
Thrive’s Strategy and Historical Success
Under the leadership of Josh Kushner, Thrive Capital has made AI a central theme of its fundraising pitch. The firm highlighted its strategic relationship with OpenAI to attract investors, which also helped them secure recent investments like in the robotics startup Physical Intelligence.
Founded 15 years ago, Thrive has backed several notable technology companies including Instagram, GitHub, and Spotify. The firm was also the first investor in Oscar Health, a health insurance company co-founded by Kushner, which went public in 2021. Thrive's most significant investment to date was a $1.8 billion stake in Stripe, a payments provider now valued at $50 billion, making it the third-most valuable U.S. startup after Elon Musk’s SpaceX and OpenAI.
Beyond Technology
Thrive Capital’s reach extends beyond technology into the entertainment and finance sectors. The firm’s 2020 investment in Skims, Kim Kardashian’s shapewear brand, and a minority stake acquisition led by Walt Disney CEO Bob Iger and KKR co-founder Henry Kravis, reflect Thrive's diversified investment strategy. Additionally, Josh Kushner and his wife, model Karlie Kloss, purchased Life magazine in March, with plans to release its first issue next year.
Future Prospects
Thrive Capital’s newest funds will be split between a $1 billion early-stage venture fund and a $4 billion fund dedicated to later-stage investments. As a generalist investor, Thrive does not limit itself to specific industries, a strategy that has helped it avoid the pitfalls of the crypto startup boom.
In his letter to investors, Josh Kushner expressed optimism about the future, stating, “The technological breakthroughs that will occur over the next years will be unlike anything we have ever experienced before.” This sentiment underscores Thrive Capital’s confidence in the potential of emerging technologies, particularly AI, to drive future growth and innovation.
Conclusion
Thrive Capital’s record-breaking $5 billion fundraising is a significant milestone that reflects the renewed investor confidence in venture capital, driven by the transformative potential of AI. With its diversified investment strategy and strong focus on AI, Thrive is well-positioned to capitalize on the technological advancements of the coming years.
References
- Thrive Capital Raises $5 Billion
- OpenAI and the AI Boom
- Venture Capital’s AI Focus