Sequoia Capital to invest in AI firm Anthropic, defying industry convention on backing rivals: Financial Times

According to the Financial Times, Sequoia Capital is reportedly joining a major funding round for Anthropic, the AI company that created Claude. This move is certain to capture significant attention across Silicon Valley.

Why the buzz? Venture capital firms have traditionally avoided investing in competing companies within the same industry, typically choosing to support a single frontrunner. However, Sequoia, which already has stakes in both OpenAI and Elon Musk's xAI, is now also placing a substantial bet on Anthropic.

The timing is especially noteworthy considering the testimony given under oath last year by OpenAI CEO Sam Altman. During OpenAI's defense against a high-profile lawsuit from Musk, Altman addressed prior rumors concerning restrictions in OpenAI's 2024 funding round. While he denied that OpenAI investors were broadly barred from supporting rival firms, he did confirm that investors with ongoing access to OpenAI's confidential information were informed that such access would be revoked "if they made non-passive investments in OpenAI’s competitors." Altman described this as a standard industry practice to prevent the misuse of competitively sensitive information.

The Financial Times reports that Sequoia is participating in a funding round led by Singapore’s GIC and U.S. investor Coatue, with each contributing $1.5 billion. Anthropic aims to raise $25 billion or more at a valuation of $350 billion—more than double the $170 billion valuation it held just four months ago. The Wall Street Journal and Bloomberg had earlier reported the round at $10 billion. Microsoft and Nvidia have together committed up to $15 billion, while venture capital firms and other investors are said to be adding another $10 billion or more.

Sequoia's relationship with Altman is long-standing. When Altman left Stanford to launch Loopt, Sequoia provided backing. He later served as a "scout" for Sequoia, introducing the firm to Stripe, which became one of its most successful portfolio companies. Sequoia's new co-leader, Alfred Lin, also appears to have a relatively close relationship with Altman. Lin has interviewed Altman multiple times at Sequoia events, and when Altman was temporarily removed from OpenAI in November 2023, Lin publicly expressed eagerness to support Altman's "next world-changing company."

Although Sequoia's investment in xAI might appear to break from the traditional venture capital strategy of selecting a single winner, that move is largely seen not as backing an OpenAI rival, but as strengthening the firm's extensive connections with Elon Musk. Sequoia invested in X when Musk acquired Twitter and rebranded it, holds stakes in SpaceX and The Boring Company, and is a major investor in Neuralink, Musk's brain-computer interface venture. Former long-time Sequoia leader Michael Moritz was even an early investor in Musk's X.com, which later became part of PayPal.

Sequoia's apparent shift regarding portfolio conflicts is especially striking given its historical position. As reported in 2020, the firm took the unprecedented step of divesting from its investment in payments company Finix after determining the startup competed with Stripe. Sequoia forfeited its $21 million investment, allowing Finix to retain the funds while relinquishing its board seat, information rights, and shares. This marked the first time in the firm's history it had cut ties with a recently funded company over a conflict of interest. (Sequoia had led Finix's $35 million Series B round just months earlier.)

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The reported investment in Anthropic follows significant leadership changes at Sequoia. The firm's global steward, Roelof Botha, was unexpectedly ousted in a surprise vote this fall, just days after meeting with this editor at TechCrunch Disrupt. Alfred Lin and Pat Grady—who led the Finix deal—have now assumed control.

Anthropic is reportedly gearing up for an IPO that could happen as early as this year. We have contacted Sequoia Capital for a statement.