Sequoia Capital is reportedly participating in a large funding round for Anthropic, the AI startup behind Claude, according to the Financial Times. It’s a move that’s sure to turn heads in Silicon Valley.
Why? Because venture capital firms have historically avoided backing competing companies in the same sector, preferring to place their bets on a single winner. But here is Sequoia, which has already invested in both OpenAI and Elon Musk’s xAI, and which is now also throwing its weight behind Anthropic.
The timing is especially surprising given what OpenAI CEO Sam Altman said under oath last year. As part of OpenAI’s defense against Musk’s lawsuit, Altman addressed rumors of restrictions on OpenAI’s 2024 funding round. While denying that OpenAI investors were largely prohibited from backing rivals, he acknowledged 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.” Altman called this “industry standard” protection (which it is) against the misuse of competitively sensitive information.
According to the FT, Sequoia is participating in a funding round led by Singapore’s GIC and US investor Coatue, each contributing $1.5 billion. Anthropic aims to raise $25 billion or more at a valuation of $350 billion — more than double its $170 billion valuation from just four months ago. The WSJ and Bloomberg had previously reported the round at $10 billion. Microsoft and Nvidia have committed up to $15 billion combined, with VCs and other investors said to contribute another $10 billion or more.
The Sequoia connection to Altman runs deep. When Altman dropped out of Stanford to start Loopt, Sequoia backed him. He later became a “scout” for Sequoia, introducing the company to Stripe, which became one of the firm’s most valuable portfolio companies. Sequoia’s new co-head Alfred Lin and Altman also seem relatively close. Lin has interviewed Altman numerous times at Sequoia events, and when Altman was briefly removed from OpenAI in November 2023, Lin publicly said he would eagerly support Altman’s “next world-changing venture”.
While Sequoia’s investment in xAI may already appear to have bucked the traditional VC approach of picking winners, that bet is generally viewed as less about backing an OpenAI competitor and more about deepening the firm’s extensive ties to Elon Musk. Sequoia invested in X when Musk bought Twitter and rebranded it, is an investor in SpaceX and The Boring Company, and is a big backer of Neuralink, Musk’s brain-computer interface company. Former longtime Sequoia executive Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s apparent turnaround on portfolio conflict is particularly striking given its historical stance. As we reported in 2020, the firm took the extraordinary step of walking away from its investment in payments company Finix after determining that the startup was competing with Stripe. Sequoia lost its $21 million investment, letting Finix keep the money while giving up its board seat, information rights and stock, marking the first time in the firm’s history that it had severed ties with a newly funded company due to a conflict of interest. (Sequoia had led Finix’s $35 million Series B round just months earlier.)
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The reported Anthropic investment comes after dramatic leadership changes at Sequoia, with the firm’s global steward, Roelof Botha, being pushed out in a surprise vote this fall, just days after sitting with this editor at TechCrunch Disrupt, where Lin and Pat Grady — who had led the Finix deal — took over.
Anthropic is reportedly preparing for an IPO that could come as early as this year. We’ve reached out to Sequoia Capital for comment.