According to the Financial Times, Sequoia Capital is said to be participating in a major funding round for Anthropic, the artificial intelligence company that created Claude. This development is likely to attract significant attention in Silicon Valley, as it represents a notable shift from conventional venture capital practices. Historically, VC firms have steered clear of investing in competing companies within the same industry, typically choosing to support a single frontrunner instead.

Yet Sequoia, which already holds investments in both OpenAI and Elon Musk's xAI, is now also supporting Anthropic. The timing is particularly striking in light of testimony given last year by OpenAI CEO Sam Altman. During OpenAI's legal defense against a lawsuit filed by Musk, Altman addressed prior rumors concerning limitations in OpenAI's 2024 funding round. While he denied that OpenAI investors were broadly barred from backing rival firms, he confirmed that investors with ongoing access to OpenAI's confidential information were informed that such access would be revoked "if they made non-passive investments in OpenAI's competitors." Altman described this as an "industry standard" safeguard against the misuse of competitively sensitive information—a characterization that is accurate.

The Financial Times reports that Sequoia is joining a funding round spearheaded by Singapore's GIC and U.S. investor Coatue, with each contributing $1.5 billion. Anthropic is seeking to raise $25 billion or more at a valuation of $350 billion, which is more than double the $170 billion valuation it held just four months prior. Earlier reports from The Wall Street Journal and Bloomberg had placed the round at $10 billion. Microsoft and Nvidia have together committed up to $15 billion, while venture capital firms and other investors are expected to add another $10 billion or more.

The relationship between Sequoia and Sam Altman is longstanding. When Altman left Stanford to launch Loopt, Sequoia provided backing. He later served as a "scout" for the firm, introducing them to Stripe, which subsequently became one of Sequoia's most valuable portfolio companies. Sequoia's new co-leader, Alfred Lin, also appears to have a close connection with Altman. Lin has interviewed Altman on multiple occasions at Sequoia events, and when Altman was temporarily removed from OpenAI in November 2023, Lin publicly expressed his eagerness to support Altman's "next world-changing company."

While Sequoia's investment in xAI might already seem to break from the traditional VC strategy of selecting a single winner, that move is largely seen as less about supporting an OpenAI competitor and more about strengthening the firm's deep ties to Elon Musk. Sequoia invested in X when Musk acquired Twitter and rebranded it, is an investor in SpaceX and The Boring Company, and is a major backer of Neuralink, Musk's brain-computer interface venture. Former longtime Sequoia leader Michael Moritz was even an early investor in Musk's X.com, which later became part of PayPal.

Sequoia's apparent shift regarding portfolio conflicts is especially conspicuous given its historical position. In 2020, the firm took the unusual step of divesting from its investment in the payments company Finix after determining the startup competed with Stripe. Sequoia forfeited its $21 million investment, allowing Finix to retain the funds while relinquishing its board seat, information rights, and shares. This marked the first time in the firm's history that it severed ties with a recently funded company due to a conflict of interest, coming just months after Sequoia led Finix's $35 million Series B round.

Anthropic is reportedly preparing for an initial public offering that could occur as soon as this year. A request for comment has been sent to Sequoia Capital.