Sequoia Capital has reportedly joined a blockbuster funding round for Anthropic, the AI startup behind Claude, according to the Financial Times. This is a step that Silicon Valley can take.
Why? Because venture capital firms have historically avoided backing competing companies in the same sector, preferring to place bets on one winner. But here Sequoia, having invested in OpenAI and Elon Musk’s xAI, is now also throwing its weight behind Anthropic.
The timing is remarkable as OpenAI CEO Sam Altman said at his swearing-in last year. As part of OpenAI’s defense against Musk’s lawsuit, Altman addressed rumors about restrictions on OpenAI’s 2024 funding round. While he denied that OpenAI investors were prohibited from supporting competitors, he admitted that investors with continued access to OpenAI’s confidential information were told that access would be terminated “if they make non-passive investments in OpenAI’s competitors.” Altman calls this “industry standard” protection (that is) against the misuse of sensitive information by competitors.
According to the FT, Sequoia joined a funding round led by Singapore’s GIC and US investor Coatue, which each contributed $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. WSJ and Bloomberg previously reported the round at $10 billion. Microsoft and Nvidia have committed up to $15 billion combined, with VCs and other investors expected to contribute another $10 billion or more.
Sequoia’s connection to Altman runs deep. When Altman dropped out of Stanford to start Loopt, Sequoia backed him. He later became a “scout” for Sequoia, introducing the company to Stripe, which became one of its most valuable portfolio companies. Sequoia’s new boss Alfred Lin and Altman also seem close. Lin has interviewed Altman several times at Sequoia events, and when Altman was briefly fired from OpenAI in November 2023, Lin publicly said he would return to Altman’s “next world-changing company.”
While Sequoia’s investment in xAI may have defied traditional VC approaches to picking winners, the bet is seen as less about supporting an OpenAI competitor and more about enhancing the company’s extensive relationship with 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. Longtime Sequoia boss Michael Moritz was even an early investor in Musk’s X.com, which is part of PayPal.
Sequoia’s reversal in portfolio conflict is particularly striking given its historical stance. In 2020, the company took the extraordinary step of abandoning its investment in the payment company Finix after determining that the startup would compete with Stripe. Sequoia lost investment of $ 21 millionallowing Finix to keep money while giving up board seats, information rights, and shares, marking the first time in its history that the company has 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 reported investment comes after a dramatic leadership change at Sequoia, where Roelof Botha was ousted in a shock vote. day after sitting with this editor at TechCrunch Disrupt, with Lin and Pat Grady – who ‘d lead the Finix deal – took over.
Anthropic is reportedly preparing for an IPO that could come as soon as this year. We’ve reached out to Sequoia Capital for comment.