Key Points
- Venture capital firm Sequoia is reportedly investing in Anthropic, a major rival to another of its portfolio companies, OpenAI.
- The move breaks a long-standing unwritten rule in Silicon Valley of not backing competing companies.
- Anthropic is raising a massive $25 billion funding round at a $350 billion valuation.
- The investment is a surprise given Sequoia’s deep ties to OpenAI CEO Sam Altman.
Venture capital giant Sequoia is reportedly joining a massive funding round for Anthropic, the AI startup behind the Claude chatbot. The move is a major surprise in Silicon Valley, breaking an unwritten rule of the venture capital world: don’t invest in competing companies. Sequoia is already a backer of both OpenAI and Elon Musk’s xAI.
The decision is particularly interesting given what OpenAI CEO Sam Altman said in court last year. He acknowledged that investors with access to OpenAI’s confidential information would lose that access if they made a “non-passive” investment in a competitor. It’s unclear if Sequoia’s new investment in Anthropic falls into that category, but it’s certainly a bold move.
Anthropic is in the process of raising a massive $25 billion funding round at a staggering $350 billion valuation. That’s more than double its valuation from just four months ago. The round is being led by Singapore’s sovereign wealth fund, GIC, and U.S. investor Coatue. Microsoft and Nvidia have also committed up to $15 billion combined.
Sequoia’s relationship with Sam Altman runs deep. The firm backed his first startup and has worked with him for years. This makes their decision to invest in his biggest rival all the more intriguing.
This isn’t the first time Sequoia has broken the “no competing investments” rule. The firm is also an investor in Elon Musk’s xAI, though many see it as more of a bet on Musk himself, given Sequoia’s extensive ties to his other companies.
In the past, Sequoia has been a stickler for this rule. In 2020, they famously walked away from a $21 million investment in a payments company because it competed with another of their portfolio companies, Stripe. This apparent change in strategy suggests that the AI boom is so big that even the most established players are willing to bend their own rules to get a piece of the action.
