Sequoia Joins Mega AI Investment in Anthropic

Sequoia Capital is preparing to write its first cheque to Anthropic, stepping into one of Silicon Valley’s biggest AI deals yet as the race to back frontier models intensifies.

The talks reflect how quickly the biggest AI companies are attracting ever-larger sums from deep-pocketed investors.

Sequoia Capital is targeting a major investment in Anthropic, the fast-growing AI company behind the Claude chatbot, according to the Financial Times (FT). The move, which was in talks earlier, would mark the first time the venture capital firm has backed Anthropic, despite having invested in rival AI groups in recent years.

People familiar with the matter told the FT that Sequoia plans to join a massive funding round led by Singapore’s sovereign wealth fund GIC and US hedge fund Coatue. Both GIC and Coatue are expected to put in $1.5 billion each.

Double delight

Anthropic is aiming to raise $25 billion or more in total, valuing the company at about $350 billion, according to multiple people cited by the FT. That figure would more than double the company’s valuation from roughly $170 billion just four months ago.

Microsoft and Nvidia have already committed up to $15 billion combined, the report said, with venture capital firms and other investors expected to contribute another $10 billion or more.

The talks are still ongoing, and the final size of the round could change. Anthropic has not yet decided which investors will ultimately be allowed in, but the funding is expected to close in the coming weeks, the FT reported.

Breaking the ‘one winner’ rule

For decades, venture capital firms have followed an unwritten rule: pick one horse and ride it to the finish line. You don’t usually fund two companies trying to kill each other. Yet Sequoia already has major stakes in OpenAI and Elon Musk’s xAI. By backing Anthropic, they are now betting on three of the biggest players in the game.

According to a person familiar with Sequoia’s thinking, the scale of these companies has changed the math. “This [Anthropic deal] is a round where the company is so big that it’s gone from a VC investment to a stock investment,” the source told the FT.

The firm is reportedly “very bullish” on the idea that this isn’t a winner-take-all race. Instead, they believe each company will develop its own unique strengths.

A new guard at Sequoia

This aggressive bet on everyone strategy comes right after a major shake-up at the top of Sequoia. Just last November, the firm’s long-time leader, Roelof Botha, was ousted. Botha had previously been cautious about the massive amounts of money flowing into just a few AI giants. In an interview last year, he famously stated, “Throwing more money into Silicon Valley doesn’t yield more great companies.”

With Botha gone, the firm is now co-led by Pat Grady and Alfred Lin. This new leadership seems much more willing to ignore old rivalries. It’s a sharp turn from 2020, when Sequoia actually walked away from a $21 million investment in a startup called Finix because it competed with another one of their portfolio companies, Stripe.

The road to Wall Street

Anthropic isn’t just collecting cash; it’s growing at a breakneck pace. The company’s revenue has skyrocketed from $1 billion on an annualised basis about a year ago to nearly $10 billion today.

With numbers like those, a trip to the stock market seems inevitable. Anthropic has already hired the law firm Wilson Sonsini to start the paperwork for an IPO that could happen as early as this year. They aren’t alone, either — OpenAI and Musk’s SpaceX are also reportedly laying the groundwork for what could be some of the biggest public listings in history.

Anthropic is shaking things up in the intense AI race as it expands its Labs.