Thrive's Joshua Kushner chides Silicon Valley VCs over AI
In its first investor letter, Thrive Capital founder Joshua Kushner criticizes West Coast VC rivals and highlights its focused investment strategy.
Stock photo for illustration only, not from the actual event
- Joshua Kushner criticizes Silicon Valley VC AI euphoria in first letter
- Thrive concentrates about 90% of capital into top 15 investments
- 2022 early-stage fund of $516 million grew to over $3.7 billion
- Thrive Holdings has acquired over 70 businesses with 35 engineers
In Thrive Capital's inaugural investor letter, founder Joshua Kushner has shared pointed remarks regarding his venture capital rivals on the West Coast, specifically addressing their approach to the artificial intelligence boom.
While his secretive New York-based firm is heavily betting on AI alongside Silicon Valley counterparts, Kushner argues that Thrive executes its strategy differently by avoiding spray-and-pray investing. Instead, the firm commits substantial capital to its backed companies, with Bloomberg estimating that roughly 90% of its capital goes into the top 15 investments in each fund.
Stock photo for illustration only, not from the actual event
Kushner contends that this makes Thrive a company of independent thinkers, writing that markets oscillate between fear and enthusiasm, and neither serves as a substitute for sound judgment. This philosophy directly contrasts with the foundational premise of Silicon Valley venture capital, popularized by Marc Andreessen, which focuses on funding outliers.
Under the outlier philosophy, VC firms place numerous bets while anticipating losses on many of them, relying on massive outlier hits like OpenAI to cover the losers. This approach often leads firms to cut ongoing support for startups that are not tracking to become dominant market winners. Kushner also dismisses the Silicon Valley notion that venture capitalists exist primarily to disrupt incumbents.
"We are independent because markets move between fear and enthusiasm, and neither is a substitute for judgment."
Joshua Kushner
Thrive's strategy has yielded strong results through stakes in high-performing startups. Its $516 million 2022 early-stage fund, featuring early investments in OpenAI, Anduril, and SpaceX, grew to over $3.7 billion by the end of June. Kushner revealed total assets under management of $60 billion, reporting a gross internal rate of return of 41% and a net IRR of 33%, alongside more than $1 billion returned to investors in the past 12 months.
Thrive Capital's concentrated investment strategy underscores structural advantages unique to well-connected mega-funds, contrasting sharply with smaller seed funds that must mitigate risk through broader diversification. Meanwhile, Thrive Holdings' spinout model—acquiring over 70 companies and deploying OpenAI's technology to upgrade them—highlights a tangible shift toward operational transformation, yielding metrics like tax returns produced 30% faster with 98% accuracy.
Source: TechCrunch
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