I read an article today about Thrive Capital (see here), which is a venture capital firm. They recently finished raising $10 billion for their 10th fund (see here). The first article details how some of Thrive’s earlier funds haven’t provided investors with great cash distributions. For example, their 2011 vintage fund has returned only $1.30 for every $1 invested. The fund still holds investments that haven’t been sold, so that will likely go up at some point as they sell more investments. The article discusses other later funds that have returned more cash to investors than the 2011 fund.

An interesting data point in the article was that Thrive’s 2022 fund has already returned 20% of the cash investors initially put into the fund. Usually, it takes 5 to 7 years before investors in venture capital funds see any cash back, so that’s a good amount of cash returned in a short time. That's good enough to put that fund in the top 5% of funds launched that same year. So how did they pull that off so fast?

In March 2022, the stock market was tanking, and Thrive bought a large amount of Carvana stock. This public stock investment eventually led to a $522 million profit, more than quadrupling Thrive’s investment. That’s why the 2022 vintage fund was eventually able to distribute $454 million in capital to investors by early 2025. But the key word is “eventually.”

I did some digging and found another article about this investment (see here). Apparently, the investors in the fund weren’t always happy about the Carvana investment. I wondered why, so I did more digging.

Assuming that Thrive bought Carvana stock at its cheapest point in March 2022, they paid about $98 per share. (It’s not likely that they timed the bottom that precisely, but let’s assume they did.)

Carvana stock went on to crash the rest of the year. The company laid off a large number of people in November (see here) as credit losses mounted, and the stock reached a low of $3.55 on December 7, 2022, when the company flirted with bankruptcy. So, from the time Thrive invested in March, the stock lost over 96% of its value in a span of just eight or nine months. Let’s assume that Thrive invested around $170 million, which they saw dwindle to about $6 or $7 million on paper. That's an unrealized paper loss of over $160 million by December 2022. They had to report performance periodically to investors, including those paper losses, and I can’t imagine that went over well. It certainly explains why some investors weren’t supportive of the Carvana investment.

The good news for investors is that Thrive didn’t sell. They rode the investment back up. This article was written in May 2025, so their shares were sold before that. Assuming they sold at the peak in early 2025, they sold for around $290 a share. (Again, not likely they timed the top, but let’s assume they did.) That means they rode the investment from $98 to $3.55 to $290. That’s a wild ride and probably not one the Thrive team or their investors enjoyed. But in the end, they were able to distribute $454 million back, and as of the writing of that article, they still held $65 million in shares (which have increased in value substantially since then).

What a fascinating story. It was a great reminder that investing isn’t always a straight line up. The key is to have faith in the company, its management, and the market they’re operating in.....along with a little bit of luck (Thrive’s investment would have gone to zero if Carvana had filed for bankruptcy). If you’ve backed the right horse and jockey and they’re running in the right race on the right track (i.e., market), maintaining your conviction can pay off, but that doesn’t mean it won’t be without pain before the payout. And conviction definitely doesn’t guarantee you won’t lose money, as Thrive came close to doing.

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