Thrive Capital has bet big on artificial intelligence, including emerging giants of the field like OpenAI and Databricks.
Now the venture capital firm is taking a different approach: creating and buying companies that it believes can benefit from A.I. — including in industries that seem far more humdrum, such as accounting — and holding on to them for a long time.
Thrive Capital is raising money for a company it has created called Thrive Holdings, which is meant to develop and buy start-ups, according to four people with knowledge of the matter. The idea is to help operate the businesses, and use the cash flow to both invest in the companies and buy up others.
The firm is in the late stages of closing about $1 billion for Thrive Holdings’ initial round of funding, according to one of the people with knowledge of the matter. The first investors include Thrive Capital’s existing group of backers, including pension funds and endowments.
But because Thrive Holdings is essentially being set up as a permanent capital vehicle, it can keep raising money over the years, these people said.
In many ways, it’s an unusual bet by Thrive Capital. The firm, which was founded in 2010 by Joshua Kushner, made its name betting on fast-growing and soon-to-be-prominent start-ups, including Instagram, the payment processor Stripe and Kim Kardashian’s Skims.
More recently, it has concentrated on A.I. businesses, having led an OpenAI funding round in October that valued the ChatGPT maker at $157 billion, as well as investments in Anysphere, an A.I. coding tool, and Isomorphic Labs, an A.I. drug researcher owned by Google.
Thrive Holdings appears to be particularly interested in everyday industries. Thrive Capital has already backed two companies that fit this mold: Crete, an accounting company, and Long Lake, which has focused on buying managers of homeowner associations. Thrive Holdings has already started investing in complementary areas, such as I.T. service providers, these people said.
Other venture capital firms have publicly committed to a serial acquisition strategy, known in the finance world as a roll-up. General Catalyst, for example, explicitly promoted its plan to support “A.I.-enabled roll-ups” when it led a fund-raising round for Eudia, an A.I.-enabled legal services company. (It has also invested in Long Lake.) Others betting on a similar strategy include the firm 8VC.
The idea is these businesses can be made vastly more efficient by incorporating A.I.; Long Lake, for example, uses such software to automate the operations of homeowner associations.
But unlike roll-ups done by Wall Street mainstays like private equity firms, the venture firms are targeting younger companies. Thrive Holdings also plans to focus heavily on the operations of the businesses it buys, in part by using a team of software engineers and Thrive’s ties to A.I. companies like OpenAI, these people said.
Thrive Holdings also differs from other venture firms via its setup as a so-called holding company that can own stakes in companies for a long time, even “forever,” one of the people with knowledge of the company said.
Over its 15-year existence, Thrive Capital and its executives, including Mr. Kushner, have incubated more than a dozen companies. At least five have valuations exceeding $1 billion. Among them is Oscar Health, the health insurer driven by its use of technology, though its current market value of $3 billion is roughly a third of where it stood when it went public in 2021.
Other businesses that Thrive Capital has incubated include the health care billing company Cedar, the health benefits app Rightway Healthcare, the virtual patient care management start-up Cadence and the online pharmacy Capsule.
