CareCredit - Women's Health April 2024

OpenAI Backer Thrive Capital Plans $3 Billion Fundraise Amid Tech Downturn

Venture firm Thrive Capital is reportedly preparing to raise at least $3 billion amid a downturn in tech funding.

The planned fundraising, the subject of a Sunday (Jan. 7) report by the Financial Times (FT), would make Thrive — a major investor in OpenAI — one of few large growth funds pitching investors for more money.

Sources tell the FT the fundraising was at an early stage and would likely formally begin in the coming months. One investor in Thrive said the fundraising would present “a very interesting litmus test” for other investors in a market in which investing has dropped dramatically.

“It’s not [going to be] a slam dunk,” the investor said. “I’d hope that investors would be pushing back on funds trying to raise at the same level as 2021 or 2020. The bar is higher for every institutional investor today.”

PYMNTS has contacted Thrive for comment but has not yet gotten a reply.

As noted here last week, fundraising for 2023 is on target to be the lowest level since 2015, with a decline of more than 50% over the prior year. Venture capital (VC) investors raised $67 billion in 2023, the lowest level since 2017. This decrease has impacted startups across the globe, leading to mass layoffs and fewer opportunities for cashing out.

PYMNTS noted this trend last month in a report on the rising number of bankruptcies among FinTech companies.

“The lifeblood of the FinTechs — VC funding, and we might liken it to the pandemic-era relief funds that shored up so many small and medium-sized businesses (SMBs) in years past — has been anemic at best,” that report said.

“And the public markets are hardly offering respite. Though the FinTech IPO Index, as tracked by PYMNTS, has rebounded in 2023, only five of the nearly four dozen FinTechs in the Index trade above ‘busted’ status [above their offer prices].”

And although there is hope that 2024 might offer easier access to funding, many observers say capital will likely be reserved for the top-performing startups.

Against this backdrop, “funding conditions will continue to be challenging, particularly at the earlier funding stages,” PYMNTS wrote. “Many startups raised money during the boom times of 2021, resulting in a logjam in funding as the average time between funding rounds shrinks. This means that runway, or the amount of time a startup can operate with its existing funds, is looking slim for many companies heading into 2024.”