Thrive Capital has invested in more than a dozen other VC firms from its growth fund

As of last fall, Thrive had invested in at least 17 venture capital firms from its $3.3 billion eighth growth-stage fund, according to emails between Thrive’s investor relations team and the California Public Employees’ Retirement System, one of the limited partners from its most recent fundraise, that were obtained by Fortune via a Freedom of Information Act request. Many of the VC firms Thrive has backed are new firms, launched in the last few years by emerging managers including Los Alamos Capital, a fund started by Scale AI CEO Alexandr Wang; Not Boring Capital, the VC fund of newsletter writer Packy McCormick; and Sheva VC, an Israeli VC firm founded by investor David Citron and Omri Casspi, a former NBA player with the Memphis Grizzlies, where Kushner is a minority owner.

Thrive declined to comment, so it’s unclear the full extent to which Thrive has invested in new VCs (often referred to as emerging managers) over the years, or how it fits into the firm’s broader investment strategy. But the investments provide a rare look at a little-discussed but important aspect of the VC industry, where venture firms incorporate other VCs into their portfolio for reasons that include helping with deal flow, giving a a vote of confidence for certain people in their network, or as an act of goodwill to a departing partner.

Some of these kinds of investments may end up becoming rather lucrative. Thrive Capital itself, which now has $14 billion in assets under management, according to SEC filings, was seeded by General Catalyst and the firm’s cofounder, Joel Cutler. A wide swath of top-performing venture capital funds in the market are run by emerging managers. But without a track record, there is also a high-risk for failure with these funds.

It’s typically only the billion-dollar-plus venture capital firms that will back other investors using their pre-existing funds, according to Kyle Stanford, an analyst at PitchBook. That’s because of the government-mandated threshold on nonqualified investments, where venture capital funds are not permitted to allocate more than 20% to things like fund of fund investments, debt, or secondaries (though they could raise specific funds to do so). It will also depend on what a venture firm’s agreements are with their own investors, called limited partners.

But the primary reason Stanford sees venture firms making investments in other VCs is for deal flow in earlier stages. “You have a source of deals that are coming through, you have an idea of which [companies] are performing well. You have that extra data that you can [use to go] and make a better decision and maybe invest down the road.”

Thrive Capital is reportedly preparing to raise its next growth fund. At the beginning of last year, Thrive repurchased the stake Goldman Sachs held in the firm, then resold it to executives including Bob Iger, Henry Kravis, and Jorge Paulo Lemann.

In response to a request for comment, a CalPERS spokesperson said that the pension fund “does not discuss its investment strategy or the operations of its investment partners.”