Sequoia is joining a blockbuster funding round for artificial intelligence firm Anthropic, in a move that raised eyebrows in Silicon Valley for breaking the taboo against backing rivals. Sequoia previously backed both OpenAI and Elon Musk’s xAI.
This is especially surprising considering what OpenAI CEO Sam Altman said under oath last year as part of his company’s defense against Musk’s lawsuit. While he denied that OpenAI investors were broadly prohibited from backing rivals, he did acknowledge that investors with ongoing access to OpenAI’s confidential information were told that access would be terminated “if they made non-passive investments in OpenAI’s competitors.”
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Altman called this “industry standard” protection (which it is) against misuse of competitively-sensitive information.
The Financial Times reported that Sequoia is joining a funding round led by Singapore’s GIC and U.S. 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.
Sequoia has a longstanding connection with Altman. The VC firm backed Altman after he dropped out of Stanford to start Loopt. Altman later became a “scout” for Sequoia, introducing the firm to Stripe, which became one of the firm’s most valuable portfolio companies.
Sequoia’s co-leader Alfred Lin has interviewed Altman numerous times at Sequoia events, and when Altman was briefly ousted from OpenAI in November 2023, Lin publicly said he’d eagerly back Altman’s “next world-changing company.”
Sequoia’s investment in xAI has been seen as less about backing in OpenAI competitor, and more about deepening the firm’s deep ties with Musk. Sequoia invested in X after Musk shortly bought Twitter and rebranded it. It is also an investor in SpaceX, The Boring Company, and Neuralink. Former longtime Sequoia leader Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s latest move is especially striking considering its historical stance. According to TechCrunch, the firm took the major step of walking away from its investment in payments company Finix after determining the startup competed with Stripe.
Sequoia forfeited its $21 million investment, letting Finix keep the money while giving up its board seat, information rights, and shares, marking the first time in the firm’s history it had severed ties with a newly funded company over a conflict of interest.
READ: Anthropic AI hit with $1.5 billion copyright settlement, judge approves deal (
The reported Anthropic investment comes after Sequoia’s global steward Roelof Botha was ousted in a surprise vote, just days after sitting down with this editor at TechCrunch Disrupt, with Lin and Pat Grady — who’d led that Finix deal — taking over.
Anthropic is reportedly preparing for an IPO which might come as early as this year, as its rival, OpenAI.