A deep-pocketed venture-capital firm run by Jared Kushner’s brother watched some of its tech startups rake in millions of dollars in federal coronavirus relief loans — despite the fact that it urged them not to take the cash, The Post has learned.
Five tech firms backed by Thrive Capital — whose 35-year-old, Harvard-educated founder Joshua Kushner is married to supermodel Karlie Kloss, and who runs the firm out of the landmark Puck Building in Manhattan’s trendy SoHo neighborhood — have snagged at least $2.8 million from the Trump administration’s Paycheck Protection Program, federal data show.
Among them are payments processor Dwolla, which has raised more than $51 million in private funding, including a $16.5 million round that Thrive backed in 2013; and Welkin Health, a software startup that’s received $29 million from private investors, including $1.5 million in seed funding and two other investments from Thrive. Dwolla and Welkin each snagged loans worth between $1 million and $2 million in April, according to federal records.
That’s despite the fact that Thrive — whose other investments include Oscar Health, ClassPass, Instacart and Robinhood — strongly warned against taking PPP funds in an April 7 email to portfolio companies that asked for advice about the loans. Among other concerns, Thrive executives warned that well-heeled startups could crowd out mom-and-pop businesses in danger of folding during the pandemic.
“The PPP loans are intended, first and foremost, for the smallest, most vulnerable businesses in our communities — the corner deli, bakery, or dry cleaner that has had to or will soon lay off its entire workforce and is on the precipice of going out of business entirely,” Thrive wrote in the email obtained by The Post. “These loans are less obviously for the startup with a host of institutional investors and several years of cash in the bank, looking to extend runway.”
Thrive executives likewise warned in the letter about “a potential backlash against those venture-backed companies who are genuinely struggling … Indeed, we are already seeing hints of this backlash in recent media reports.”
Three days earlier, a partner at Union Square Ventures had published a blog post advising venture-backed firms “with a lot of money in the bank and limited COVID19 impact to think twice about applying for PPP.”
A source close to Thrive said companies that took PPP money represent less than 1 percent of the firm’s investments so far.
“We stand by the opinion we gave to our portfolio companies who reached out that PPP loans were intended first and foremost for the smallest, most vulnerable businesses in our communities,” Thrive spokesman Jesse Derris told The Post.
Dwolla, however, never got Thrive’s letter because it never asked for the firm’s advice on PPP to begin with, Thrive said. Ditto for Imbellus, a standardized test developer that won at least $350,000; and Long Game Savings, a personal finance app that was approved for at least $150,000, federal data show.
Dwolla and Imbellus didn’t respond to requests for comment. But San Francisco-based Long Game confirmed it did not consult Thrive on its loan application because the fund does not sit on its board.
Welkin Health, meanwhile, was among the recipients of Thrive’s letter. It nevertheless cashed in on its $1 million-plus PPP loan a few weeks later in late April. Thrive said it also warned Morty, an online mortgage marketplace that got Thrive funding in 2017 and 2019 but went on to grab a PPP loan worth $350,000 to $1 million, according to Small Business Administration data.
Welkin didn’t respond to a request for comment. But Morty said it “carefully reviewed” the program’s guidelines and intent before applying for the money. The loan “allowed us to continue providing home ownership solutions to Americans during this challenging time,” a Morty spokesperson told The Post.
Critics say the feds made it too easy for venture-backed firms to take advantage of a $659 billion relief program that failed to reach many Main Street merchants.
“The program wasn’t there to benefit entities that had access to other capital,” Liz Hempowicz, director of public policy at the nonpartisan Project on Government Oversight, told The Post. “The well-banked, the well-lawyered and the politically well-connected did benefit from this program in a way that absolutely undermined the effectiveness of this program for those smaller businesses.”
Government watchdog group Accountable.US claimed that the fact that the startups snagged funds showed that the Trump administration managed to “pervert a program meant for struggling small businesses into another vehicle for enriching the wealthy and well-connected.”
Noting Joshua Kushner’s family ties, the handouts to startups “just happened to work to the benefit of people connected to the White House in more ways than one,” Accountable.US President Kyle Herrig told The Post.
Still, the Kushner-led venture firm’s correspondence with its startups shows it was concerned about the fallout early in the process.
“For those companies that are truly struggling and remain intent on pursuing a PPP loan, we would ask that you reach out to us directly,” Thrive executives wrote. “ Please know that now more than ever, we are here to help you and your teams in any way we can.”
Credit: Source link