Sequoia to invest in Anthropic, breaking VC taboo on backing rivals: FT

Sequoia Capital is making waves in the venture capital world by joining a significant funding round for Anthropic, the AI startup known for its Claude model, as reported by the Financial Times. This decision is particularly noteworthy in Silicon Valley, where investors have traditionally steered clear of funding competing companies within the same industry, typically opting for singular investments. What sets this situation apart is Sequoia's existing investments in both OpenAI and Elon Musk's xAI, alongside its newfound support for Anthropic. This unexpected move comes shortly after OpenAI CEO Sam Altman's testimony regarding funding restrictions. During a legal defense against Musk's lawsuit, Altman clarified that while OpenAI investors face no blanket bans on supporting competitors, those with access to proprietary information were cautioned that such access could be revoked if they made active investments in rival firms. Sequoia's participation is part of a funding initiative led by Singapore's GIC and U.S. investor Coatue, each contributing $1.5 billion. Anthropic is ambitiously seeking to raise $25 billion or more at a staggering valuation of $350 billion, more than double its previous valuation of $170 billion just four months ago. Earlier reports from The Wall Street Journal and Bloomberg pegged the funding round at $10 billion, with Microsoft and Nvidia committing up to $15 billion combined, and additional contributions from venture capitalists and other investors estimated at another $10 billion or more. The connections between Sequoia and Altman run deep; Sequoia was an early supporter when Altman left Stanford to launch Loopt and has since played a pivotal role in his career, including his introduction of Stripe to the firm. Sequoia’s new co-leader, Alfred Lin, has a history of close interactions with Altman, having interviewed him at various events. Lin expressed his willingness to support Altman’s future endeavors, especially in light of Altman's recent ousting from OpenAI. While Sequoia's investment in xAI appeared to challenge its historical approach of backing a single winner, it is largely viewed as a strategic move to strengthen ties with Elon Musk. Sequoia has invested in multiple Musk-led ventures, including X (formerly Twitter), SpaceX, and Neuralink. The shift in Sequoia’s investment strategy is particularly striking when contrasted with its past decisions. In 2020, the firm notably withdrew from an investment in the payments company Finix after recognizing that it competed with Stripe, forfeiting a $21 million investment and relinquishing its board seat and shares. This new investment in Anthropic follows significant leadership changes at Sequoia, including the surprising ousting of Roelof Botha shortly after a meeting with TechCrunch Disrupt editors. As Anthropic prepares for a potential IPO later this year, the developments at Sequoia Capital mark a significant evolution in the venture capital landscape, raising questions about traditional investment norms and competitive dynamics in the AI sector.