Thrive Capital is betting that AI can change IT services
The venture capital firm’s holding company is putting $100 million into an entity that will integrate artificial intelligence into information technology companies.
Thrive Capital’s holding company, Thrive Holdings, has raised $100 million for an entity set up to infuse artificial intelligence into information technology services companies.
The entity, Shield Technology Partners, has already acquired four IT services companies: ClearFuze Networks, IronOrbit, Delval Technology Solutions and OneNet Global, it said. Thrive Holdings calls Shield Technology Partners an “AI-enabled managed IT service platform."
IT services companies, also called managed services providers, or MSPs, typically provide IT support and manage tools like software and cloud-computing on behalf of businesses.
Founded by Josh Kushner about 15 years ago, Thrive Capital is known for some of its highflying startup investments, including in OpenAI, data analytics company Databricks and cybersecurity firm Wiz.
Investing in traditional services businesses—particularly those that rely heavily on administrative knowledge work—and adding AI to supercharge them is becoming popular among venture capital firms as AI finds its way into everyday processes.
Shield Technology Partners is the first initiative for Thrive Holdings, a holding company whose formation was announced by Thrive Capital earlier this year to acquire and expand businesses with the help of AI. The company is a permanent capital vehicle that will continuously reinvest cash from its businesses and raise capital.
As part of its effort, Shield Technology Partners will embed software engineers into each of its IT portfolio businesses, said Anuj Mehndiratta, Thrive Capital’s head of portfolio impact, data science and product. The engineers’ goal is to build an AI-driven solution that all of the portfolio companies will use, he said.
“We’ve studied all of the ways in which MSPs have perhaps been on their back foot to date with customers," Mehndiratta said, adding that IT services work is “incredibly well-suited" to what AI can streamline.
Jake Sloane, co-founder of ZBS Partners, the investment firm that Thrive Holdings partnered with to launch Shield Technology Partners, said it had previously shied away from investing in IT services until “understanding the power of AI and other cutting-edge technology."
Some of the areas in which AI can make an impact in IT services include AI agents that can autonomously help restart a computer or reset a password, Thrive’s Mehndiratta said.
In the future, AI will also help the IT services companies develop better sales and marketing capabilities, he said.
Other industries heavy on knowledge work and repetitive processes have also seen investment from traditional private-equity firms, as well as venture capital.
In the accounting sector, for instance, Bessemer Venture Partners and General Catalyst have joined Thrive Capital in taking stakes in accounting firms. Those follow on a series of similar deals led by private equity.
Last year, General Catalyst said it had amassed $1.5 billion for a fund that will similarly incubate and acquire businesses across industries and use AI to improve their workforce productivity.
Thrive Holdings is in the late stages of closing an initial round of about $1 billion, according to people familiar with the matter.
Write to Belle Lin at belle.lin@wsj.com
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