Breaking norms, Sequoia to invest in Anthropic
What's the story
In a surprising turn of events, Sequoia Capital has decided to invest in Anthropic, the AI start-up behind Claude, according to the Financial Times. The move is a major departure from the traditional venture capital practice of not investing in rival companies within the same sector. The funding round is being led by Singapore's GIC and US investor Coatue, who are each contributing $1.5 billion.
Investment details
Investment in Anthropic: A strategic move
Sequoia's decision to invest in Anthropic comes as the start-up seeks to raise $25 billion or more at a valuation of $350 billion. This would be more than double its previous valuation of $170 billion from four months ago. Microsoft and NVIDIA have pledged up to $15 billion combined, while VCs and other investors are said to be contributing another $10 billion or more.
VC practices
Sequoia's historical stance on VC practices
Sequoia's investment in Anthropic is particularly surprising given its historical stance against investing in competing companies. The firm had previously walked away from its investment in payments company Finix after determining that the start-up competed with Stripe. Sequoia forfeited its $21 million investment, allowing Finix to keep the money while giving up its board seat, information rights, and shares.
Personal ties
Connection with Altman and Musk
Sequoia's connection with OpenAI CEO Sam Altman runs deep. The firm had backed him when he dropped out of Stanford to start Loopt. He later became a "scout" for Sequoia, introducing them to Stripe, one of their most valuable portfolio companies. Despite investing in xAI, a company founded by Elon Musk to compete with OpenAI, Sequoia's investment is seen as more about strengthening its ties with Musk than backing an OpenAI competitor.