Sequoia Capital is set to join a significant funding round for Anthropic, the AI startup known for its Claude model, as reported by the Financial Times. This move is sure to catch the attention of Silicon Valley.
Why is this noteworthy? Historically, venture capital firms have steered clear of investing in competing companies within the same industry, opting instead to support a single standout. However, Sequoia, which has already put money into both OpenAI and Elon Musk’s xAI, is now backing Anthropic as well.
The timing seems especially surprising given what OpenAI CEO Sam Altman testified under oath last year. While defending OpenAI against a lawsuit from Musk, Altman addressed speculation regarding limits on OpenAI’s 2024 funding round. He denied that investors were broadly restricted from investing in rivals but confirmed that those who access OpenAI’s confidential information were warned that they would lose that access if they made active investments in competing companies. Altman referred to this as “industry standard” protection against the misuse of sensitive information.
According to the FT, Sequoia is participating in a funding round led by Singapore’s GIC and U.S. investor Coatue, each contributing $1.5 billion. Anthropic is aiming to raise $25 billion or more, with a projected valuation of $350 billion—more than double its previous valuation of $170 billion just four months ago. Earlier reports from the WSJ and Bloomberg pegged the round at $10 billion. Microsoft and Nvidia have committed up to $15 billion collectively, and additional VCs and investors are said to be contributing at least $10 billion more.
Sequoia has a long history with Altman. When he left Stanford to start Loopt, Sequoia invested in him. He later became a “scout” for the firm, helping connect them with Stripe, which has become one of their most valuable portfolio companies. Sequoia’s new co-leader Alfred Lin is also quite familiar with Altman, having interviewed him multiple times at Sequoia events. When Altman was briefly removed from OpenAI in November 2023, Lin publicly expressed his enthusiasm to support Altman’s “next world-changing company.”
While Sequoia’s investment in xAI might suggest a break from the traditional VC strategy of choosing single winners, this bet is perceived more as an effort to solidify the firm’s connections with Elon Musk. Sequoia backed Musk when he purchased Twitter and rebranded it, has invested in SpaceX and The Boring Company, and is a major supporter of Neuralink, Musk’s brain-computer interface venture. Former Sequoia leader Michael Moritz was also an early investor in Musk’s X.com, which evolved into PayPal.
Sequoia’s departure from its long-standing policy regarding portfolio conflicts is notable, especially given its history. In 2020, the firm made the rare decision to pull its investment from the payments company Finix after determining it was a competitor to Stripe. Sequoia forfeited its $21 million investment, allowing Finix to retain the funds while relinquishing its board seat, information rights, and shares, marking a groundbreaking move in the firm’s history.
The reported investment in Anthropic follows a tumultuous leadership change at Sequoia, where the firm’s global managing partner, Roelof Botha, was unexpectedly ousted in a vote this fall, just days after an interview at TechCrunch Disrupt. Alfred Lin and Pat Grady, who led the Finix deal, have taken the reins.
Anthropic is reportedly gearing up for an IPO, potentially as soon as this year. We’ve reached out to Sequoia Capital for further comment.
