Deep-pocketed sovereign wealth funds are among investors clamoring for a stake in Anthropic, the hot artificial intelligence startup taking on OpenAI. One country left out: Saudi Arabia.
As bankers line up a pool of potential new backers for Anthropic, the company has ruled out taking money from the Saudis, according to people familiar with the matter. Anthropic executives cited national security, one of the sources told CNBC.
Anthropic’s stake is for sale because it is owned by FTX, the failed cryptocurrency exchange started by Sam Bankman-Fried and is being unloaded as part of the company’s bankruptcy proceedings. FTX bought the shares three years ago for $500 million. The 8% stake is now worth more than $1 billion due to the recent boom in artificial intelligence.
Proceeds from the sale will be used to repay FTX customers. The transaction is underway and on track to close in the next two weeks, said people with knowledge of the talks who asked not to be identified because the negotiations are private.
The Class B shares, which do not carry voting rights, are being sold at Anthropic’s latest valuation of $18.4 billion, the sources said. Anthropic has raised around $7 billion in recent years from tech giants like Amazon, Alphabet and Salesforce. The large language model competes with OpenAI’s ChatGPT.
Anthropic founders Dario and Daniela Amodei have the right to question any potential investors, according to the sources. However, they are not involved in the current fundraising process or discussions with potential investors in FTX’s stake. The founders were introduced to Bankman-Fried via “effective altruism” a philosophy that involves making as much money as possible to give it your all.
Saudi Crown Prince and Prime Minister Mohammed bin Salman meets with US Secretary of State Antony Blinken (not pictured) in Jeddah, Saudi Arabia, on March 20, 2024.
Evelyn Hockstein | Reuters
While Anthropic’s founders have told bankers they will not accept money from Saudi Arabia, they do not plan to challenge funding from other sovereign wealth funds, including the United Arab Emirates’ Mubadala fund. The UAE-based company is actively considering investment, according to one of the sources.
Potential buyers of FTX shares are a syndicate of new investors for Anthropic, a source said, meaning Amazon and Alphabet will not be involved. Part of FTX’s stake is bought through special purpose vehicles, or SPVs, which allow multiple investors to raise capital. The SPVs have emailed venture firms to solicit participation, three sources said. Investment bank Perella Weinberg is managing the sale on behalf of FTX.
Representatives for Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and Saudi Arabia’s Public Investment Fund, or PIF, did not immediately respond to a request for comment.
PIF, Saudi Arabia’s sovereign wealth fund, has more than $900 billion in assets and has plowed capital into technology to diversify the country’s revenue away from oil. The fund is in talks with venture capital firm Andreessen Horowitz to create a $40 billion fund to invest in artificial intelligence, two sources with knowledge of the matter told CNBC. The discussions were first reported by The New York Times.
Saudi Crown Prince Mohammed bin Salman’s ambitious Vision 2030 Initiative seeks to modernize the economy and strengthen ties in the global financial sector. PIF has investments in companies including Uberwhile also sponsoring the LIV Golf Championship and spending heavily on professional football and tennis.
Anthropic’s national security concerns about Saudi Arabia could involve dual-use technology — software or technology that can be used for both civilian and military applications. This is an area of notable focus for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investment from certain sources in certain sectors. Saudi Arabia is also warming to China.
The kingdom’s human rights record remains a major concern for some Western partners. The most notable case in recent years was the alleged assassination of Washington Post journalist Jamal Khashoggi in 2018, an event that sparked an international backlash in the business community.
In November, Bankman-Fried was convicted of seven criminal charges connected to the FTX collapse. His sentencing is scheduled for next week, and prosecutors are recommending 40 to 50 years in prison.
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