Sequoia Capital Eyes Anthropic Investment in AI Funding Shift

Sequoia Capital, one of Silicon Valley's top venture firms, plans to invest in Anthropic, the AI company known for its Claude chatbot. This comes as Anthropic raises at least $25 billion in a round that values the startup at $350 billion. The decision breaks a long-standing rule in venture capital: firms usually pick one company per sector and avoid rivals. Reports surfaced this weekend, and people in the industry say the deal could close soon.

Background

Venture capital firms like Sequoia have built their success by betting big on a few winners. They often stay away from companies that compete directly. This keeps things simple and avoids fights over information or loyalty. Sequoia has a history of sticking to this. Back in 2020, it pulled out of a payments startup called Finix. Why? Finix went up against Stripe, another Sequoia investment. Sequoia had led Finix's $35 million funding round just months before. But it gave up its $21 million stake, board seat, and all rights to avoid the conflict. That was the first time Sequoia ever cut ties with a company it had funded.

Sequoia already backs OpenAI, the maker of ChatGPT. It also put money into xAI, Elon Musk's new AI venture. Those moves already raised eyebrows. But many see the xAI bet as more about Sequoia's close links to Musk than direct competition. Sequoia invested in Musk's X after he bought Twitter. It also backs SpaceX, The Boring Company, and Neuralink. Even older ties go back to Michael Moritz, a former Sequoia leader, who funded Musk's early X.com that became part of PayPal.

Anthropic stands out in AI. It focuses on safe AI systems. Big Tech backs it too. Amazon and Google have poured billions into the company. Now this new round pushes its value way up. Four months ago, Anthropic was valued at $170 billion. The jump to $350 billion shows how fast AI money flows.

Sequoia's ties to OpenAI run deep. Sam Altman, OpenAI's CEO, got his first funding from Sequoia for his startup Loopt out of Stanford. He later scouted deals for them, including Stripe, now one of their biggest wins. Alfred Lin, Sequoia's new co-leader, knows Altman well. Lin has interviewed him at events. When Altman got briefly pushed out of OpenAI in 2023, Lin said publicly he would back Altman's next big idea.

Key Details

The funding round for Anthropic is huge. Singapore's GIC and U.S. firm Coatue lead it. Each puts in $1.5 billion. Microsoft and Nvidia together commit up to $15 billion. Venture firms and others add another $10 billion or more. Earlier reports pegged the round smaller, around $10 billion. But now it looks like $25 billion total.

Leadership Shakeup at Sequoia

This news hits after big changes at Sequoia. Roelof Botha, the long-time leader, got voted out days after a public event. Alfred Lin and Pat Grady now run things. Grady led the Finix deal years back. The firm has split into three parts recently: one for U.S., one for China, one for India and Southeast Asia. That shakeup might signal a new, bolder approach.

Anthropic eyes an IPO this year. That could value it even higher and bring more public money in.

"We'd eagerly back Sam's next world-changing company." – Alfred Lin, Sequoia co-leader, on Sam Altman in 2023

What This Means

This investment could change how venture firms operate. If Sequoia pulls it off, others might follow. Funds could spread bets across rivals in hot fields like AI. That means more cash for startups, but also more overlap. Companies might share less with investors who back enemies. Board advice could get tricky too.

AI draws record money. OpenAI hit $157 billion valuation last year. xAI raised billions fast. Anthropic now joins at $350 billion. Big Tech leads: Microsoft in OpenAI, Amazon and Google in Anthropic, Musk self-funding xAI somewhat. VCs like Sequoia squeeze in to stay in the game.

For Anthropic, the cash fuels growth. It builds data centers, hires talent, and pushes Claude against ChatGPT. Safety focus sets it apart, but competition heats up. An IPO soon tests public appetite for AI stocks.

Sequoia risks its reputation. Past moves like dropping Finix showed commitment to no-conflict rules. Now backing three AI giants tests that. Investors in Sequoia funds watch close. Will returns suffer from divided focus? Or does spreading bets pay off in a field where one flop could sink a portfolio?

Silicon Valley buzzes. Firm leaders talk privately. Some call it smart adaptation to AI's scale. Others worry it erodes trust. Deals like this show money trumps old norms when stakes run high.

Anthropic stays quiet on the round. Sequoia has not commented. But people close to both say talks advance. If it happens, expect ripple effects across tech funding.