OpenAI’s recent investment in Thrive Holdings tells a story many in the entrepreneurial space have seen before but often fail to discuss in depth. Circular investments, while appearing to bolster growth, can paint a more complicated picture. For someone like me, who has spent over two decades in business across multiple industries, these types of ventures bear lessons for startups, founders, and investors alike.
When OpenAI backs Thrive Holdings, a company essentially developed under the umbrella of one of its own major investors, Thrive Capital, this raises eyebrows. Some argue this approach creates closed circuits of value, where gains are more synthetic than organic. If you're a founder looking at these practices, the question you must ask is: does this type of financing truly create sustainable growth, or is it just a numbers game?
Now, let’s break this down into actionable insights while examining the layers of this complex strategy.
What you should know about the OpenAI-Thrive Collaboration
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Embedded Collaboration: OpenAI is embedding its product, research, and engineering teams into Thrive Holding’s portfolio companies. This is designed to accelerate the use of artificial intelligence in target sectors like accounting and IT services. At first glance, this appears as a clever way to ensure immediate value creation, but it bypasses one crucial element, what happens to these companies when OpenAI’s direct involvement phases out? Startups relying on external actors for key innovations often stumble when left to function independently.
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Circular Investment Model: Thrive Holdings was launched earlier this year but is already leveraging its connections with OpenAI to roll up companies ripe for AI integration. Thrive Capital, which has deep investments in OpenAI, essentially creates a closed-loop. OpenAI’s inserted technology boosts Thrive’s companies, increasing Thrive’s valuation, which in turn inflates OpenAI’s perceived stake value. The signals this sends to the entrepreneurial community are mixed. It leads to inflated valuations that less-connected startups cannot replicate, even with groundbreaking products.
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Valuation Gaming: OpenAI is a $500 billion entity. While impressive, circular structures like this raise the question of whether their value is inflated by such intertwined arrangements. Thrive-backed accounting firm Crete claimed significant productivity boosts from embedded AI tools, improvements that undoubtedly contribute to hyping its worth. Are these gains reflective of genuine innovation or restricted benefits derived exclusively from private collaborations?
Statistics That Paint the Scenario
- CoreWeave Example: OpenAI recently invested $350 million in CoreWeave, which then purchased Nvidia chips to provide computing power back to OpenAI. This was followed by increases in CoreWeave’s valuation, inflating OpenAI’s stake value. A similar dynamic is emerging with Thrive Holdings.
- Market Impact Potential: As per reports from CNBC, OpenAI’s partnerships heavily influence sector shifts but also leave behind smaller businesses unable to compete with the level of integration these deals afford Thrive’s portfolio.
A Guide for Founders: Lessons from Circular Deals
Here’s how founders, especially startup leaders trying to grow transparently, can use insights from these practices to create sustainable businesses:
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Choose Partners Wisely: Focus on investors or collaborators who contribute beyond capital. Investments should not exclusively depend on direct intervention for operational success (like OpenAI embedding its staff).
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Validate Independently: Even if a well-known entity aids your product’s development, ensure your metrics, market validation, and growth reflect organic adoption. Circular partnerships cannot replace real-world product-market fit.
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Diversify Venture Support: Relying on a single major investor or partner could lead you into a dependency loop. Thrive’s model shows how investor-backed incubations can overinflate businesses, which may falter without robust, external growth indicators.
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Avoid Closed Value Circles: Build relationships across a range of ecosystems, channels, investors, and customers, who remain independent of one another. Lofty valuation boosts may attract attention but can be detrimental in the long-term if contributions are not accompanied by competitive independence.
Common Pitfalls Entrepreneurs Must Avoid
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Inflating Value via Tech Collaborations: Too many startups believe that partnering with a large company automatically places them on a fast track to growth. This logic, often inspired by examples like OpenAI, may leave businesses exposed if the technology’s benefit is tied only to the size of the partner’s financing.
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Turning Away from Core Mission: Founders influenced by the buzz of investor-centric strategies, such as high-profile funding rounds, sometimes neglect their original vision. Running after inflated valuations rarely aligns with steady growth.
Final Thoughts and Insights
Circular investments, like the one between OpenAI and Thrive Holdings, serve as much as a lesson as they do an example of leveraging partnerships for rapid scaling. As a startup founder, watching these moves unfold reminds me that sustainable business rarely comes from closed circuits. It’s about understanding market needs independently and building strong yet diversified frameworks for success.
The key takeaway here? Wear two hats, a skeptical observer of exaggerated growth examples and a focused creator of real-world, independent value. Want to learn from their playbook without replicating their risks? Study your infrastructure critically but act with focus on competitive authenticity. Partners and scalable growth should work in tandem, not exist as isolated performance metrics waiting to impress potential buyers.
OpenAI may have found its formula to stay on top, but the long-standing test of business remains, authentic demand, independent operations, and meaningful value generation. For those of us outside multibillion-dollar circles, smart strategic positioning is not optional, it’s survival.
FAQ
1. What is OpenAI’s recent investment in Thrive Holdings?
OpenAI has invested in Thrive Holdings, a private equity-style rollup for companies benefiting from AI integration, primarily focusing on sectors such as accounting and IT services. Thrive Holdings is backed by Thrive Capital, which is also a major OpenAI investor. Read the original TechCrunch article
2. What is the purpose of the OpenAI-Thrive Holdings collaboration?
The partnership aims to embed OpenAI’s engineering, product, and research teams into Thrive's portfolio companies to accelerate AI adoption and boost operational efficiency. Learn about OpenAI’s enterprise push
3. How does this deal fit OpenAI’s circular investment model?
OpenAI’s investment creates a closed loop where Thrive Capital’s investment in OpenAI supports Thrive Holdings, which then benefits from OpenAI’s technology and resources, boosting both parties' valuations. Explore OpenAI’s circular strategies
4. Are there other examples of OpenAI’s circular investments?
Yes. OpenAI invested $350 million in CoreWeave, a company that purchased Nvidia chips to provide computing power back to OpenAI, thus inflating both CoreWeave’s and OpenAI’s valuations. Discover CoreWeave’s collaboration details
5. How does Thrive Holdings operate its portfolio business?
Thrive Holdings uses a private equity rollup model to acquire and incubate companies that can benefit from rapid AI implementation in legacy and service-based industries. Learn about Thrive’s strategy
6. How does the collaboration affect smaller businesses in these industries?
Smaller businesses may struggle to compete with Thrive Holdings’ portfolio companies that receive exclusive access to OpenAI’s AI resources and embedded teams. Analyze the market impact
7. What are the potential risks in OpenAI’s circular investment model?
Circular investments may inflate valuations artificially, creating risks of an "AI bubble" where success depends on insider deals rather than genuine market demand. Read about analysts’ concerns on AI bubbles
8. What role does AI play in Thrive-backed companies like Crete?
Thrive-backed accounting firm Crete reported significant productivity boosts by leveraging OpenAI’s AI-related tools, claiming hundreds of hours saved. Learn about Crete’s AI integration
9. What lessons can founders derive from circular deals like this?
Startup founders should aim for diversified investments, independently validated growth metrics, and partnerships that contribute organic, sustainable value rather than relying solely on closed value circles. No specific link for this insight.
10. How is Thrive Holdings structured for scalability using AI?
Thrive Holdings is structured to vertically integrate companies and use AI to boost efficiency and scale operations, beginning with back-office sectors like accounting and IT services. Understand Thrive Holdings’ operational structure
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta Bonenkamp's expertise in CAD sector, IP protection and blockchain
Violetta Bonenkamp is recognized as a multidisciplinary expert with significant achievements in the CAD sector, intellectual property (IP) protection, and blockchain technology.
CAD Sector:
- Violetta is the CEO and co-founder of CADChain, a deep tech startup focused on developing IP management software specifically for CAD (Computer-Aided Design) data. CADChain addresses the lack of industry standards for CAD data protection and sharing, using innovative technology to secure and manage design data.
- She has led the company since its inception in 2018, overseeing R&D, PR, and business development, and driving the creation of products for platforms such as Autodesk Inventor, Blender, and SolidWorks.
- Her leadership has been instrumental in scaling CADChain from a small team to a significant player in the deeptech space, with a diverse, international team.
IP Protection:
- Violetta has built deep expertise in intellectual property, combining academic training with practical startup experience. She has taken specialized courses in IP from institutions like WIPO and the EU IPO.
- She is known for sharing actionable strategies for startup IP protection, leveraging both legal and technological approaches, and has published guides and content on this topic for the entrepreneurial community.
- Her work at CADChain directly addresses the need for robust IP protection in the engineering and design industries, integrating cybersecurity and compliance measures to safeguard digital assets.
Blockchain:
- Violetta’s entry into the blockchain sector began with the founding of CADChain, which uses blockchain as a core technology for securing and managing CAD data.
- She holds several certifications in blockchain and has participated in major hackathons and policy forums, such as the OECD Global Blockchain Policy Forum.
- Her expertise extends to applying blockchain for IP management, ensuring data integrity, traceability, and secure sharing in the CAD industry.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the "gamepreneurship" methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the POV of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.
About the Publication
Fe/male Switch is an innovative startup platform designed to empower women entrepreneurs through an immersive, game-like experience. Founded in 2020 during the pandemic "without any funding and without any code," this non-profit initiative has evolved into a comprehensive educational tool for aspiring female entrepreneurs.The platform was co-founded by Violetta Shishkina-Bonenkamp, who serves as CEO and one of the lead authors of the Startup News branch.
Mission and Purpose
Fe/male Switch Foundation was created to address the gender gap in the tech and entrepreneurship space. The platform aims to skill-up future female tech leaders and empower them to create resilient and innovative tech startups through what they call "gamepreneurship". By putting players in a virtual startup village where they must survive and thrive, the startup game allows women to test their entrepreneurial abilities without financial risk.
Key Features
The platform offers a unique blend of news, resources,learning, networking, and practical application within a supportive, female-focused environment:
- Skill Lab: Micro-modules covering essential startup skills
- Virtual Startup Building: Create or join startups and tackle real-world challenges
- AI Co-founder (PlayPal): Guides users through the startup process
- SANDBOX: A testing environment for idea validation before launch
- Wellness Integration: Virtual activities to balance work and self-care
- Marketplace: Buy or sell expert sessions and tutorials
Impact and Growth
Since its inception, Fe/male Switch has shown impressive growth:
- 5,000+ female entrepreneurs in the community
- 100+ startup tools built
- 5,000+ pieces of articles and news written
- 1,000 unique business ideas for women created
Partnerships
Fe/male Switch has formed strategic partnerships to enhance its offerings. In January 2022, it teamed up with global website builder Tilda to provide free access to website building tools and mentorship services for Fe/male Switch participants.
Recognition
Fe/male Switch has received media attention for its innovative approach to closing the gender gap in tech entrepreneurship. The platform has been featured in various publications highlighting its unique "play to learn and earn" model.