Thrive Founder Criticizes Overheated AI Investment in Silicon Valley

CoinWorld reported:

Joshua Kushner, founder of Thrive Capital, questioned the way Silicon Valley venture capitalists are chasing the AI boom in the first investor letter from the company. He believes that while the business opportunities in AI are indeed vast, the rising market sentiment should not replace investment judgment, especially when it comes to relaxing pricing and selection standards.

Funds Concentrated on Leading Projects
This letter was subsequently disclosed by Bloomberg. Kushner stated in the letter that the Silicon Valley investment circle tends to overly focus on minor technological iterations while neglecting where technology will ultimately lead the industry. Although Thrive is also heavily invested in AI, its approach is not to cast a wide net but to concentrate funds on a few of the most promising companies.

Bloomberg cited data indicating that about 90% of Thrive's funds in each of its funds are directed towards the top 15 projects. Kushner believes this model allows for a concentration of time, capital, and energy on the most promising people and directions, rather than relying on the traditional venture capital logic of making numerous bets and waiting for a few projects to succeed.

Deepening Cooperation with OpenAI
He also dismissed the notion that venture capital can only disrupt old industries from the outside, arguing that AI not only allows new companies to challenge old ones but can also drive traditional industries to transform from within. This idea has become an important strategic direction for Thrive.

The firm is not only a major investor in OpenAI, but their relationship will deepen further by the end of 2025: OpenAI will hold shares in Thrive Holdings, a platform spun off from Thrive that primarily acquires companies and collaborates with OpenAI to advance AI transformation. Part of the deal also includes OpenAI sending employees to participate in relevant projects at Thrive's portfolio companies.

Currently, Thrive Holdings has acquired over 70 companies, with an engineering team of about 35 people. Kushner cited that its accounting platform has improved tax processing speed by about 30% through agents, achieving an accuracy rate of 98%; its IT service company has enabled agents to independently handle half of the help desk tickets.

OpenAI and SpaceX Boost Returns
Thrive's strategy has garnered attention partly because it has early bets on several high-performing companies. Bloomberg reported that a $516 million early-stage fund established by Thrive in 2022 had invested early in OpenAI, Anduril, and SpaceX, and as of the end of June this year, the fund's valuation has exceeded $3.7 billion.

Kushner disclosed in the letter that Thrive currently manages assets totaling $60 billion, with an overall internal rate of return of 41% and a net internal rate of return of 33%. Over the past 12 months, Thrive has returned over $1 billion in liquidity to investors and stated that it may continue to achieve billions of dollars in exit returns in the coming quarters.

The report also pointed out that Thrive's concentrated investment model is not easily replicable by most emerging small funds. Compared to early funds that rely more on diversified bets to cover risks, Thrive's stance reflects the growing divergence in the U.S. venture capital circle regarding AI valuations, investment pace, and discipline.

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