The company has raised $7.3 billion in the past year as Silicon Valley's
deal-making has changed due to the allure of artificial intelligence.
One of the most exciting artificial intelligence start-ups in the world, Anthropic, raised $450 million in
May of last year from investors such as Salesforce and Google. It was the start of an incredible financing
binge.
Anthropic has secured $100 million from two Asian telecom companies by August. Subsequently,
Amazon pledged $4 billion to it, and Google added an additional $2 billion.
Menlo Ventures, a venture capital firm, closed a $750 million investment deal in Anthropic this month.
In total, the AI startup made $7.3 billion in revenue in a single year. Not only were its five funding
arrangements notable for their size and speed but also for their unique architecture.
Anthropic consented to use chips and cloud computing services from the companies that invested in it in
one of those partnerships. This effectively meant that a portion of the funds it raised would be reinvested
in its investors. Additionally, Menlo established a legal body known as a "special purpose vehicle"
in order to group together smaller investors who were considering Anthropic.
Vice President Dave Brown of Amazon Web Services, who worked on Amazon's agreement with
Anthropic, remarked, "These deals are so complicated."
Even if artificial intelligence (AI) has the potential to completely change civilization, it has begun by
upending Silicon Valley's startup deal-making. Every fifteen months or so, young companies usually raise
capital after demonstrating that their operations have expanded. However, with the advent of generative
AI in late 2022, when it was able to produce text, images, sounds, and video, investors have battled for
the rights to work with the hottest developers, throwing aside the rule book.
Few businesses, like Anthropic, which sells several versions of its artificial intelligence technology and
creates a chatbot named Claude, better exemplify that transition. According to three people with
knowledge of the start-up's finances, its worth has tripled to $15 billion in the past year. According to
two of the sources, it generated about $8 million in monthly income last year and anticipates growing
that amount by almost eight times this year.
Other AI startups, such as Character and OpenAI.Similar investment agreements have been made by AI
and Cohere in their competition to amass the greatest sums of money, create the most profitable alliances,
employ the greatest personnel, and obtain the greatest quantity of computer chips. Recently, OpenAI
closed a deal valued at at least $80 billion.
According to Stanford finance professor Ilya Strebulaev, "if you miss the winner in the space, you're
kind of out of the game," investors cannot afford to miss out on the action.
Regulators have recently taken notice of some of the big giants' investments in artificial intelligence
start-ups. The Federal Trade Commission announced last month that it had begun looking into possible
antitrust breaches related to Amazon and Google's interests in Anthropic.
According to a representative for Anthropic, the company intends to work with the F.T.C. The business
declined to provide more comments. The Information first revealed that Anthropic was receiving
investment from Menlo Ventures.
Dario Amodei, the CEO, and his sister Daniela Amodei, the president, established Anthropic in 2021
to create a start-up that would develop artificial intelligence within limits. Last year,
Dario Amodei stated in a podcast interview that there was a 10 to 25 percent risk that artificial
intelligence technology would wipe out humans.
However, he stated that "it'll go not just fine, it'll go really, really great" if it doesn't occur.
Anthropic has had unusual funding from the beginning. It collected $124 million in 2021 from investors
that included the Swiss organization Center for Emerging Risk Research, which seeks to “build a future
guided by wisdom and compassion for all sentient beings,” and businessman Jaan Tallinn, who is
well-known for concentrating on the existential threats associated with technology. (The organization is
now known as Polaris Ventures.)
Anthropic raised $580 million in 2022 to fund research into developing advanced artificial intelligence
(A.I.) technologies and ensuring their safety. The majority of the funding came from Sam
Bankman-Fried, the creator of the cryptocurrency exchange FTX, and his associates. That amount far
outstripped what venture investors had put in other A.I. start-ups. They were members of the effective
altruist community, which has long considered artificial intelligence to be an existential threat.
Anthropic was left with an unclear future after FTX filed for bankruptcy in November 2022 and gave
new management authority over its assets. A few days later, OpenAI debuted ChatGPT, an AI-powered
chatbot, which completely changed its prospects. Dario Amodei and other former OpenAI employees
developed a substantial portion of the technology that powered ChatGPT before departing to found
Anthropic.
As a result, Google decided to make its first investment in Anthropic. Additionally, Anthropic consented
to purchase processing capacity via Google Cloud, which it uses for technology training and support.
Amazon and Anthropic signed a similar agreement in September, with Amazon contributing up to $4
billion. According to a person with knowledge of the situation, Anthropic's Claude chatbot was the most
well-liked artificial intelligence service available on Amazon Web Services, the company's cloud
computing platform.
Anthropic committed to using Amazon-designed specialized computer chips to develop its artificial
intelligence as part of the agreement. If Anthropic succeeds, Amazon's investment in the startup might
provide significant profits. The cloud computing agreement will improve Amazon's financial results in
the interim.
According to two people familiar with the arrangement, the investment was set up as convertible notes,
or debt that converts to equity when Anthropic meets specific objectives.
Anthropic received funding from Amazon in a manner similar to that of OpenAI. Microsoft awarded
OpenAI $1 billion in 2019, the majority of which was used to purchase processing capacity via
Microsoft's Azure cloud service. Since then, Microsoft has invested an additional $12 billion in the
business, with the majority of that sum being used by OpenAI for Microsoft cloud services.
(The Times sued Microsoft and OpenAI, claiming that they violated copyright.)
Because businesses like Google and Amazon are investing money that ultimately boosts their income,
some investors have doubts about these kinds of partnerships. The businesses declared the plans to be
kosher.
According to Google spokesman Daniel Gabis, the start-up's agreement to use Google's cloud services is
not tied to Google's investment in Anthropic. He said that they had "always been separate."
An Amazon representative named Casey McGee stated that the company accurately records all income
and outlays. He declared, "It is completely false to suggest otherwise or that AWS's agreement with
Anthropic is anything other than a typical business agreement."
Even after receiving billions from Google and Amazon, Anthropic was aware that it would eventually
require additional funding. In order to make their product more accurate, powerful, and up-to-date,
generative AI start-ups are always expanding, improving, and refining their technology, which calls for a
significant amount of costly processing power.
For Anthropic, finding fresh investors was not difficult. However, a lot of people who expressed interest
intended to put in between $10 and $25 million, whereas the company was shooting for considerably
more.
The head of business development at Anthropic, Neerav Kingsland, gave a speech in November at a
conference organized by Menlo Ventures, an investor in the company. With a twist, Menlo offered to
spearhead Anthropic's upcoming funding round. What if the company combined all of the tiny investors
into a single special-purpose vehicle?
Anthropic would save time and the procedure would be simplified by the arrangement. According to
someone with knowledge of the discussions, Mr. Kingsland and the founders of Anthropic concurred.
According to two persons with knowledge of the matter, Anthropic informed investors that $15 billion
was the lowest valuation it would accept.
According to a person with knowledge of the matter, Anthropic is no longer doing official fundraising
events after receiving the $750 million this month. However, there might be another chance for investors
soon.
This month, as part of its bankruptcy procedures, FTX requested permission from the U.S. Bankruptcy
Court in Delaware to sell its eight percent interest in Anthropic. The lawyers for FTX stated that they
aimed to sell the shares in tandem with future rounds of Anthropic fundraising as soon as possible.
The lawyers stated that FTX had an understanding "that Anthropic will continue to seek additional
rounds of equity financing."
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