Sequoia Capital is making waves in the venture capital landscape by reportedly participating in a significant funding round for Anthropic, the AI startup recognized for creating Claude. This strategic move, highlighted by the Financial Times, defies traditional investment norms prevalent in Silicon Valley, where firms typically shun backing direct competitors.
What’s noteworthy is Sequoia’s existing investments in both OpenAI and Elon Musk’s xAI, which challenges the norm of selecting a single market leader. The decision is particularly surprising in light of remarks made by OpenAI CEO Sam Altman during a recent legal dispute, where he disclosed that investors who had access to OpenAI’s sensitive information would face restrictions if they chose to invest in rival enterprises. This practice is considered standard across the industry to protect proprietary data.
According to the Financial Times, Sequoia is joining a funding initiative spearheaded by Singapore’s GIC and U.S. investor Coatue, each contributing $1.5 billion to the cause. Anthropic is seeking to amass $25 billion or more, targeting a valuation of $350 billion, which more than doubles its previous valuation of $170 billion from just four months ago. Earlier reports from the Wall Street Journal and Bloomberg indicated that the funding round aimed for $10 billion. With commitments from Microsoft and Nvidia totaling up to $15 billion, additional venture capitalists and investors are expected to contribute over $10 billion.
The history between Sequoia and Altman runs deep. Sequoia initially backed Altman when he dropped out of Stanford to launch Loopt and later facilitated his introduction of Stripe to the firm, which became one of Sequoia’s most successful investments. The connection continues with Sequoia’s new co-leader Alfred Lin, who has shown strong support for Altman in past forums.
While Sequoia’s previous investment in xAI raised eyebrows regarding its diversified portfolio, this move is perceived as a tactical effort to enhance its relations with Elon Musk. Sequoia has investments across Musk’s ventures, including SpaceX and Neuralink, reflecting a robust partnership.
Historically, Sequoia has been cautious about portfolio conflicts, exemplified by its decision to relinquish a $21 million investment in the payments firm Finix due to its competition with Stripe. This marked a rare instance where Sequoia severed ties with a company shortly after funding due to a conflict of interest.
As Anthropic prepares for a potential IPO later this year, the implications of Sequoia’s latest investment strategy are significant. The firm had not commented on the details of the investment at the time of this report.
