Sequoia invests in Anthropic, breaks VC taboo by supporting rivals: FT

Sequoia Capital is reportedly participating in a blockbuster investment for Anthropic, the AI ​​startup behind Claude, according to the Financial Times. It’s a move sure to turn heads in Silicon Valley.

Why? Because financial institutions have previously avoided supporting competing companies in the same sector, they are preferring to place their bets on a single winner. Yet here is Sequoia, already invested in OpenAI and Elon Musk’s xAI, now throwing its weight behind Anthropic, too.

The timing is especially surprising given what OpenAI CEO Sam Altman said at his swearing-in last year. As part of OpenAI’s defense against high profile blame it on MuskAltman responded to earlier rumors about financial restrictions for OpenAI 2024. While he denied that OpenAI investors are prohibited from supporting competitors, he did admit that investors with access to OpenAI’s secrets were told that access would end “if they make money to participate in OpenAI’s competition.” Altman called this “industrial” protection (which it is) against the misuse of information that affects competition.

According to the FT, Sequoia is joining a fund led by Singapore’s GIC and US investor Coatue, which is providing $1.5 billion. Anthropic is looking to raise $25 billion or more at a valuation of $350 billion — more than double its $170 billion valuation from four months ago. WSJ and Bloomberg had previously reported on the $10 billion round. Microsoft and Nvidia have pledged a combined $15 billion, with VCs and other investors reportedly contributing $10 billion or more.

Sequoia’s connection to Altman runs deep. When Altman left Stanford to start Loopt, Sequoia helped him. He later became a “scout” for Sequoia, and introduced the company to Stripe, which became one of the company’s most important companies. Sequoia’s new CEO Alfred Lin and Altman also seem very close. Lin interviewed Altman several times during the Sequoia event, and after Altman was briefly fired from OpenAI in November 2023, Lin publicly said he would back Altman’s “next world-changing company.”

While Sequoia’s investment in xAI may already seem to be at odds with the traditional VC strategy of picking winners, this bet is seen as less than supporting OpenAI’s competition and deepening the company’s relationship with Elon Musk. Sequoia invested in X when Musk bought Twitter and rebuilt it, is an investor in SpaceX and The Boring Company, and is a major backer of Neuralink, Musk’s brain-computer interface company. Former Sequoia CEO Michael Moritz was also an investor in Musk’s X.com, which became part of PayPal.

Sequoia’s apparent shift in reputational contention is particularly notable given its reputation. As we reported in 2020, the company made a surprising move to exit its business in the payment company Finix after identifying a startup that competed with Stripe. Sequoia he lost his $21 millionallowing Finix to keep the money while giving up its seat, rights to information, and shares, which marks the first time in the company’s history to terminate a contract with a company that received new funds due to a conflict of interest. (Sequoia led Finix’s $35 million Series B round a few months earlier.)

Anthropic’s reported investment comes after a major change in leadership at Sequoia, where the company’s chief executive, Roelof Botha, was forced to take a surprise vote. days after sitting down and this editor at TechCrunch Disrupt, with Lin and Pat Grady – who led the Finix partnership – to take over.

Anthropic is reportedly planning an IPO that could come as soon as this year. We’ve reached out to Sequoia Capital for an answer.