Sequoia Capital Backs Anthropic in $25 Billion AI Funding Round

Sequoia Capital, a top venture capital firm, is joining a funding round for Anthropic that could raise $25 billion or more. The deal puts Anthropic's value at $350 billion. This comes as Silicon Valley sees fast growth in AI companies. Sequoia already has money in OpenAI and xAI, rivals to Anthropic. The round is led by Singapore's GIC and U.S. firm Coatue, each putting in $1.5 billion.

Background

Anthropic builds AI models like Claude, which competes with ChatGPT from OpenAI. The company started in 2021 by former OpenAI staff. It has grown fast thanks to big investments. Microsoft and Nvidia have promised up to $15 billion already. Now this new round adds more cash from venture firms and others.

Venture capital firms like Sequoia used to pick one company in a field and stick with it. They avoided putting money in direct rivals. This kept things simple and let them focus on one winner. Sequoia has a history of this. Back in 2020, it pulled out of a payments startup called Finix. Finix competed with Stripe, another Sequoia investment. Sequoia gave up its $21 million stake and board seat to avoid the conflict.

Sequoia has deep ties to key people in AI. Sam Altman, head of OpenAI, got early backing from Sequoia for his first company. He also helped them find Stripe. Alfred Lin, now a co-leader at Sequoia, has talked with Altman many times. In 2023, when Altman faced trouble at OpenAI, Lin said he would back Altman's next big idea.

Sequoia also invests in Elon Musk's companies. It put money into xAI, Musk's AI venture. But many see that as more about Musk ties than direct competition with OpenAI. Sequoia backed Musk's X after he bought Twitter. It also invests in SpaceX, The Boring Company, and Neuralink.

Key Details

The funding round values Anthropic at $350 billion. That is more than double its $170 billion value from four months ago. GIC and Coatue lead with $1.5 billion each. Microsoft and Nvidia cover up to $15 billion. Venture firms and others make up the rest, at least $10 billion.

Leadership Changes at Sequoia

Sequoia saw big shifts recently. Roelof Botha left after a vote by partners. Alfred Lin and Pat Grady now lead. Grady handled the Finix deal years back. These changes come as AI investments heat up.

Anthropic may go public this year. An IPO would let it raise more money and give shares to early backers.

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

What This Means

This deal shows venture firms changing old rules. They now back multiple AI players. The AI field moves so fast that missing out on one could hurt. Sequoia risks tension between its portfolio companies. OpenAI and Anthropic compete head-on for users and talent.

More cash flows into AI. Anthropic can hire engineers, build data centers, and train bigger models. Its valuation jump shows investor faith. But high values mean pressure to deliver results.

Other firms watch closely. Andreessen Horowitz raised $15 billion for AI and crypto. This could lead to more cross-investments. Conflicts may rise, but the big money in AI pushes firms to join in.

Anthropic's growth adds to the AI race. Claude models handle tasks like coding and research. With this funding, Anthropic keeps pace with OpenAI and others. Microsoft ties give it cloud power. Nvidia supplies chips.

Silicon Valley feels the shift. Startups chase AI deals. Talent moves between firms. Regulators watch for market power. But for now, the funding keeps pouring in.

Sequoia stays quiet on the deal. Anthropic has not commented. The round wraps up soon, sources say.