Sequoia Capital is reportedly joining a major funding round for Anthropic, the AI startup behind Claude. This move is sure to turn heads in Silicon Valley because venture capital firms have historically avoided backing competing companies in the same sector, preferring to place their bets on a single winner. Yet here is Sequoia, already invested in both OpenAI and Elon Musk’s xAI, now throwing its weight behind Anthropic as well.
The timing is particularly surprising given previous statements from OpenAI CEO Sam Altman. Last year, as part of OpenAI’s defense against a lawsuit from Elon Musk, Altman addressed rumors about restrictions in OpenAI’s funding round. While he denied that OpenAI investors were broadly 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 an industry standard protection against the misuse of competitively sensitive information.
According to reports, Sequoia is joining a funding round led by Singapore’s GIC and U.S. investor Coatue, who are each contributing one and a half billion dollars. Anthropic is aiming to raise twenty-five billion dollars or more at a valuation of three hundred and fifty billion dollars. That is more than double its valuation from just four months ago. Microsoft and Nvidia have committed up to fifteen billion dollars combined, with venture capital firms and other investors said to be contributing another ten billion dollars or more.
The connection between Sequoia and Sam Altman runs deep. When Altman dropped out of Stanford to start Loopt, Sequoia backed him. He later became a scout for Sequoia, introducing the firm to Stripe, which became one of its most valuable portfolio companies. Sequoia’s new co-leader Alfred Lin and Altman also appear comparatively close. Lin has interviewed Altman numerous times at Sequoia events, and when Altman was briefly ousted from OpenAI, Lin publicly said he would eagerly back Altman’s next world-changing company.
While Sequoia’s investment in xAI might seem to have already contradicted the traditional venture capital approach of picking winners, that bet is widely 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 major backer of Neuralink. Longtime Sequoia leader Michael Moritz was even an early investor in Musk’s X.com, which became part of PayPal.
Sequoia’s apparent reversal on portfolio conflicts is especially glaring given its historical stance. In 2020, the firm took the extraordinary step of walking away from its investment in the payments company Finix after determining the startup competed with Stripe. Sequoia forfeited its twenty-one million dollar investment, letting Finix keep the money while giving up its board seat, information rights, and shares. This marked the first time in the firm’s history it had severed ties with a newly funded company over a conflict of interest.
The reported Anthropic investment comes after dramatic leadership changes at Sequoia, where Roelof Botha was pushed out in a surprise vote. Alfred Lin and Pat Grady, who led that Finix deal, have taken over. Anthropic is reportedly preparing for an IPO that could come as soon as this year.