It's similar to leverage.
There's a reason its easy for funds to get big with a small LP commitment round, and there's also a reason most funds close after hitting certain numbers, increasing the AUM means increased complexity, and thus, potential implosion.
The real world bears many examples of growing AUM portfolio that blew up past a certain size.
There's no counterexample that I know of , of a fund with a consistent growth pattern that started small, hit size, and then increasing further their size with the same trajectory from having more investment dollars to use.
From your statement I can't tell if you think that having more after tax money is a benefit or a drawback for Thiel's investments.
Also at higher AUM VC you have the Softbanks (and now every major VC firm that needs to compete at that level or be left in the dust)