Sequoia Capital is reportedly participating in a successful 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.
Why? Because venture capital firms have historically avoided backing competing companies in the same field, preferring to place their bets on a single winner. Yet here’s Sequoia, which has already invested in both OpenAI and Elon Musk’s xAI, and is now throwing its weight behind Anthropic as well.
The timing is especially surprising given what OpenAI CEO Sam Altman said under oath last year. As part of OpenAI’s defense against Musk’s lawsuit, Altman addressed rumors of restrictions on OpenAI’s 2024 funding round. While he denied that OpenAI’s investors were generally 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 competitors of OpenAI.” Altman called this “industry standard” protection (which it is) against the misuse of sensitive competitive information.
According to the FT, Sequoia is joining a funding round led by Singapore’s GIC and US investor Coatue, which are each contributing $1.5 billion. Anthropic aims to raise $25 billion or more at a $350 billion valuation — more than double its $170 billion valuation from just four months ago. The WSJ and Bloomberg had earlier reported the round at $10 billion. Microsoft and Nvidia have committed up to $15 billion together, with VCs and other investors said to be contributing 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 “tracker” for Sequoia, introducing the company to Stripe, which became one of the company’s most valuable portfolio companies. Sequoia’s new co-head Alfred Lin and Altman also seem relatively close. Lin has interviewed Altman several times at Sequoia events, and when Altman was briefly ousted from OpenAI in November 2023, Lin said publicly that he would eagerly support Altman’s “next world-changing company.”
While Sequoia’s investment in xAI may already seem to go against the traditional VC approach to picking winners, this bet is widely seen as less about backing an OpenAI competitor and more about deepening the company’s extensive ties to Elon Musk. Sequoia invested in X when Musk bought Twitter and rebranded it, is an investor in SpaceX and The Boring Company, and is a major backer of Neuralink, Musk’s brain-computer interface company. Sequoia’s longtime leader Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s apparent reversal of portfolio conflicts is particularly glaring given its historical stance. As we reported in 2020, the company took the extraordinary step of exiting its investment in payments company Finix after finding that the startup was competing with Stripe. Sequoia forfeited its $21 million investment, allowing Finix to keep the money while giving up its board seat, information rights and stock, marking the first time in the company’s history that it has cut ties with a newly funded company due to a conflict of interest. (Sequoia had led Finix’s $35 million Series B round just months earlier.)
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The reported Anthropic investment comes after dramatic leadership changes at Sequoia, where Roelof Botha was ousted in a surprise vote just days after sitting with this editor at TechCrunch Disrupt, with Lin and Pat Grady — who led that Finix deal — taking 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.
