Pando

Thrive Capital raises $400 million Fund IV, will focus on entrepreneurs, not industry or stage

By Michael Carney , written on October 6, 2014

From The News Desk

Thrive Capital has raised a $400 million fourth fund. The New York City firm, now in its fifth year, has leveled up significantly since its $5 million maiden fund raised in 2009 and following its second and third funds of $49 million and $150 million respectively.

When it comes to venture capital funds, size does matter. But what is the right size? The answer depends on a firm’s investing style and objectives, but counter to common sense, bigger isn’t always better.

Raising too much can make it difficult to deploy capital prudently, and often puts fund partners, and their management fees, at odds with the best interests of their limited partner backers. But, fail to raise enough capital and it’s hard to be considered a real player. It’s not uncommon that modest sized funds lose out on the best deals because entrepreneurs are seeking deeper pocketed backers, or even if they manage to snag a rocket ship, it can be difficult to double down on these winners.

At nearly half a billion dollars, Thrive IV is right sized, according to firm founder and Managing Partner Josh Kushner. It’s a tough thing to assess for any firm, but even more so for Thrive given that Kushner’s describes the firm as stage and industry agnostic.

Thrive has backed up this mantra in across its first 60 investments, making everything from Seed and Series A bets in Kickstarter, Jibe, Oscar (where Kushner is a co-founder), Warby Parker, Fab, and Simple, to growth-stage bets in Whisper, Spotify and Twitch, the latter of which lead to a massive exit when Amazon snapped up the video network for $970 million. But Thrive’s biggest IRR, no doubt, came via the firm’s Series B bet on Instagram (alongside Benchmark, Sequoia, Greylock and Baseline), which resulted in the firm a doubling its investment in just 72 hours. The firm's portfolio also includes everything from consumer to enterprise to healthcare and real estate tech.

So if Thrive isn’t focused on sector or stage, how does it decide where to invest? The answer may seem trivial, given the entrepreneur-friendly climate in Silicon Valley, but the answer is that Thrive invests in founders and ideas, first and foremost, looking to be proactive and opportunistic, rather than reactive, according to Kushner. To hear him describe it, the lack of focus is almost a thesis or an investment mandate in itself.

Thrive, which has grown to support a 9 person investment team, has largely taken on Kushner’s introverted personality, a fact that doesn’t seem to be holding it back much. The firm and its partners don’t blog, hardly tweet, and keep only a bare bones website. When it participates in a funding or in an exit, the founders and the company are very much the stars, not the investors. In many ways it’s a throwback to the way venture capital was a few decades ago, when the best and most respected firms were almost secret societies in the way they managed access and information flow. It’s a far cry from the “everybody is a brand” approach that seems to be in favor today.

Notoriously media shy, but wickedly intelligent, Kushner, now 29, comes from a family of savvy investors. His father, Charles Kushner, is a prolific real estate investor, a business his brother Jared Kushner runs today. Prior to forming Thrive, Josh co-founded Vostu, a popular Latin America social gaming startup. Today, in addition to his Managing Partner role at Thrive, the a Harvard Business School graduate, is also co-CEO of Oscar, a software- and big data-driven health insurance company.

So with Kushner’s attention pulled in many directions, it’s impressive that he’s been able to build Thrive as quickly and as successfully as he has. But the early results tell an attractive story and each fund has been oversubscribed, Kushner says. Thrive only disclosed Princeton University and Wellcome Trust as LPs in Fund IV, but prior LPs have included other university trusts and several healthcare providers.

Thrive is a baby by venture capital standards. Most funds are graded on a seven to ten year time horizon, and with Thrive II, the firm’s first institutional fund, in just its fourth year, the verdict remains out. But while t may be too early to call Thrive a success, Kushner has at least grown the firm to a place where it now has real firepower. He did pretty well when he was working with the equivalent of a pistol, let’s see what he can do with a bazooka.

Update: An earlier version of this article indicated, based on information provided by a firm spokesperson, that Thrive IV was a $420 million fund. It has been updated to indicate the correct fund size of $400 million.