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, in response to the Monetary Instances. It’s a transfer positive to show heads in Silicon Valley.

Why? As a result of enterprise capital companies have traditionally prevented backing competing firms in the identical sector, preferring to position 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 especially stunning given what OpenAI CEO Sam Altman mentioned below oath final yr. As a part of OpenAI’s protection in opposition to 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 data have been advised that entry can be terminated “in the event that they made non-passive investments in OpenAI’s opponents.” Altman referred to as this “trade customary” safety (which it’s) in opposition to misuse of competitively-sensitive data.

In line with the FT, Sequoia is becoming a member of a funding spherical led by Singapore’s GIC and U.S. investor Coatue, that are every contributing $1.5 billion. Anthropic is aiming to boost $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 as much as $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 one of many agency’s most respected portfolio firms. 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 would possibly appear to have already contradicted the normal VC method of choosing winners, that guess is broadly seen 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 significant 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 obtrusive 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 funding, letting Finix preserve the cash whereas giving up its board seat, data rights, and shares, marking the primary time within 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 Sequence 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 up.

Anthropic is reportedly getting ready for an IPO that would come as quickly as this yr. We’ve reached out to Sequoia Capital for remark.

Sequoia Capital is reportedly becoming a member of a blockbuster funding spherical for Anthropic, the AI startup behind Claude, in response to the Monetary Instances. It’s a transfer positive to show heads in Silicon Valley.

Why? As a result of enterprise capital companies have traditionally prevented backing competing firms in the identical sector, preferring to position 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 especially stunning given what OpenAI CEO Sam Altman mentioned below oath final yr. As a part of OpenAI’s protection in opposition to 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 data have been advised that entry can be terminated “in the event that they made non-passive investments in OpenAI’s opponents.” Altman referred to as this “trade customary” safety (which it’s) in opposition to misuse of competitively-sensitive data.

In line with the FT, Sequoia is becoming a member of a funding spherical led by Singapore’s GIC and U.S. investor Coatue, that are every contributing $1.5 billion. Anthropic is aiming to boost $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 as much as $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 one of many agency’s most respected portfolio firms. 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 would possibly appear to have already contradicted the normal VC method of choosing winners, that guess is broadly seen 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 significant 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 obtrusive 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 funding, letting Finix preserve the cash whereas giving up its board seat, data rights, and shares, marking the primary time within 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 Sequence 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 up.

Anthropic is reportedly getting ready for an IPO that would come as quickly as this yr. We’ve reached out to Sequoia Capital for remark.