Sequoia Capital is making its first investment in Anthropic, a company it had previously overlooked for years. The prominent Silicon Valley firm is participating in a substantial fundraising round that is anticipated to reach $25 billion.
This funding round is expected to more than double Anthropic's valuation, increasing it from $170 billion just four months ago to $350 billion currently. The capital is being contributed by a diverse group of investors, indicating a significant influx of funding.
GIC, Singapore's sovereign wealth fund, and the U.S. investment firm Coatue are each contributing $1.5 billion. Microsoft and Nvidia are collectively investing up to $15 billion.
Additional venture funds and institutional players are adding $10 billion or more to the round. The final amount has not yet been finalized, and Anthropic is still in the process of selecting participants. However, the deal is projected to close soon, according to reports from the Financial Times.
Sequoia's Leadership Shift and Multi-Rival Investment Strategy
This investment marks a departure from Sequoia Capital's previous approach. Roelof Botha, the firm's former leader, had expressed reservations about Anthropic, believing that venture capital was being excessively allocated to overhyped companies. Last year, Botha stated that "Throwing more money into Silicon Valley doesn’t yield more great companies."
However, Botha was succeeded in November, and the firm is now led by Pat Grady and Alfred Lin, who have adopted a different strategy. Sequoia Capital has already invested in OpenAI and Elon Musk's xAI, and now it is backing Anthropic as well.
This strategy of investing in multiple competing companies within the same sector is unusual. Typically, venture capital firms focus on backing a single winner in a given market. However, the immense financial activity in the artificial intelligence (AI) sector appears to be altering this conventional practice.
An individual involved in the deal commented that the scale of this funding round transcends traditional venture investing. Sequoia Capital does not seem concerned about the potential overlap, with the same source noting that the firm holds significant stakes in both OpenAI and xAI. They believe these companies will pursue distinct paths, which is the driving force behind this strategic shift rather than an attempt to identify a single dominant player.
While Sequoia Capital has a well-established track record with investments in companies like Google, Apple, Airbnb, and Stripe, this marks its first involvement in a late-stage deal for Anthropic.
Anthropic is experiencing significant financial growth, with its revenue reportedly increasing tenfold to $10 billion in December, a substantial rise from its valuation of $1 billion a year prior.
Such rapid growth is uncommon, even within the technology industry. The company is primarily recognized for its chatbot, Claude, which is widely utilized in various engineering workflows.
Further developments are anticipated, as Anthropic has engaged the law firm Wilson Sonsini to prepare for a potential Initial Public Offering (IPO). The company is also in discussions with investment banks regarding the offering process. If plans proceed as expected, a public listing could occur later this year, positioning Anthropic alongside companies like OpenAI and SpaceX, which are also reportedly preparing for public offerings.