Sequoia to put money into Anthropic, breaking VC taboo on backing rivals: FT

Sequoia Capital is reportedly becoming a member of a blockbuster funding spherical for Anthropic, the AI startup behind Claude, according to the Financial Times. It’s a transfer positive to flip heads in Silicon Valley.

Why? As a result of enterprise capital companies have traditionally prevented backing competing corporations in the identical sector, preferring to place their bets on a single winner. But right here’s Sequoia, already invested in each OpenAI and Elon Musk’s xAI, now throwing its weight behind Anthropic, too.

The timing is notably stunning given what OpenAI CEO Sam Altman mentioned below oath final 12 months. As a part of OpenAI’s protection towards Musk’s lawsuit, Altman addressed rumors about restrictions in OpenAI’s 2024 funding spherical. Whereas he denied that OpenAI buyers have been broadly prohibited from backing rivals, he did acknowledge that buyers with ongoing entry to OpenAI’s confidential information have been advised that entry can be terminated “in the event that they made non-passive investments in OpenAI’s rivals.” Altman known as this “trade normal” safety (which it is) towards misuse of competitively-sensitive information.

In accordance to the FT, Sequoia is becoming a member of a funding spherical led by Singapore’s GIC and U.S. investor Coatue, which are every contributing $1.5 billion. Anthropic is aiming to increase $25 billion or extra at a $350 billion valuation — greater than double its $170 billion valuation from simply 4 months in the past. The WSJ and Bloomberg had earlier reported the spherical at $10 billion. Microsoft and Nvidia have dedicated up to $15 billion mixed, with VCs and different buyers mentioned to be contributing one other $10 billion or extra.

The Sequoia reference to Altman runs deep. When Altman dropped out of Stanford to begin Loopt, Sequoia backed him. He later turned a “scout” for Sequoia, introducing the agency to Stripe, which turned certainly one of the agency’s most beneficial portfolio corporations. Sequoia’s new co-leader Alfred Lin and Altman additionally seem comparatively shut. Lin has interviewed Altman quite a few occasions at Sequoia occasions, and when Altman was briefly ousted from OpenAI in November 2023, Lin publicly mentioned he’d eagerly again Altman’s “subsequent world-changing firm.”

Whereas Sequoia’s funding in xAI might sound to have already contradicted the conventional VC strategy of choosing winners, that guess is broadly considered as much less about backing an OpenAI competitor and extra about deepening the agency’s in depth ties to Elon Musk. Sequoia invested in X when Musk purchased Twitter and rebranded it, is an investor in SpaceX and The Boring Firm, and is a serious backer of Neuralink, Musk’s brain-computer interface firm. Former longtime Sequoia chief Michael Moritz was even an early investor in Musk’s X.com, which turned a part of PayPal.

Sequoia’s obvious reversal on portfolio conflicts is particularly obvious given its historic stance. As we reported in 2020, the agency took the extraordinary step of strolling away from its funding in funds firm Finix after figuring out the startup competed with Stripe. Sequoia forfeited its $21 million investment, letting Finix preserve the cash whereas giving up its board seat, information rights, and shares, marking the first time in the agency’s historical past it had severed ties with a newly funded firm over a battle of curiosity. (Sequoia had led Finix’s $35 million Collection B spherical simply months earlier.)

The reported Anthropic funding comes after dramatic management modifications at Sequoia, the place the agency’s international steward, Roelof Botha, was compelled apart in a shock vote this fall simply days after sitting down with this editor at TechCrunch Disrupt, with Lin and Pat Grady — who’d led that Finix deal — taking on.

Anthropic is reportedly making ready for an IPO that might come as quickly as this 12 months. We’ve reached out to Sequoia Capital for remark.