Sequoia Capital would join a blockbuster funding round for Anthropic, the AI startup behind Claude, according to the Financial Times. It’s a move that’s sure to turn heads in Silicon Valley.
For what? Because venture capitalists have historically avoided backing competing companies in the same industry, preferring to bet on a single winner. Yet here is Sequoia, already invested in OpenAI and Elon Musk’s xAI, now also supporting Anthropic.
The timing is particularly surprising given what OpenAI CEO Sam Altman said under oath last year. As part of OpenAI’s defense against Musk’s lawsuit, Altman responded to rumors regarding restrictions in OpenAI’s 2024 funding cycle. While he denied that OpenAI investors were largely prohibited from backing competitors, he acknowledged that investors with continued access to OpenAI’s confidential information were told that access would be terminated “if they made non-passive investments in OpenAI’s competitors.” Altman called this protection an “industry standard” (which it is) against the misuse of competitively sensitive information.
According to the FT, Sequoia joins a funding round led by Singapore’s GIC and American investor Coatue, who each contribute $1.5 billion. Anthropic aims to raise $25 billion or more at a valuation of $350 billion, more than double its $170 billion valuation from just four months ago. The WSJ and Bloomberg previously announced a $10 billion fundraising round. Microsoft and Nvidia together have committed up to $15 billion, with venture capital firms and other investors contributing an additional $10 billion or more.
The Sequoia connection with Altman runs deep. When Altman left Stanford to start Loopt, Sequoia supported him. He then became a “scout” for Sequoia, introducing Stripe to the company, which became one of the company’s most valuable portfolio companies. Alfred Lin, Sequoia’s new co-leader, and Altman also seem relatively close. Lin interviewed Altman several times at Sequoia events, and when Altman was briefly ousted from OpenAI in November 2023, Lin publicly stated that he would enthusiastically support Altman’s “next world-changing company.”
Although Sequoia’s investment in xAI appears to have already contradicted the traditional venture capital approach of picking winners, the bet is widely seen as aimed less at propping up a competitor to OpenAI than deepening the company’s extensive ties to Elon Musk. Sequoia invested in X when Musk bought Twitter and renamed 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 executive Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s apparent turnaround in the face of portfolio conflicts is particularly egregious given its historical position. As we reported in 2020, the company took the extraordinary step of exiting its investment in payments company Finix after determining that the startup competed with Stripe. Sequoia renounced its investment of 21 million dollarsletting Finix keep the money while giving up its board seat, information rights and shares, marking the first time in the company’s history that it severed ties with a newly funded company due to a conflict of interest. (Sequoia had led Finix’s $35 million Series B round a few months earlier.)
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Anthropic’s announced investment comes after dramatic leadership changes at Sequoia, where the company’s global head, Roelof Botha, was forced to step down in a surprise vote this fall. days after sitting with this publisher at TechCrunch Disrupt, with Lin and Pat Grady – who had led that Finix deal – taking over.
Anthropic is reportedly preparing for an IPO that could take place as soon as this year. We have contacted Sequoia Capital for comment.