Deep-pocketed sovereign wealth funds are among the investors clamoring to get a stake in Anthropic, the red-hot artificial intelligence startup taking on OpenAI. One country that is excluded: Saudi Arabia.
As bankers line up a group 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.
The stake in Anthropic is for sale because it belongs to FTX, the failed cryptocurrency exchange started by Sam Bankman-Fried, and will be liquidated 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 ongoing and will close in the next two weeks, said people familiar with the talks who asked not to be named because the negotiations are private.
The Class B shares, which carry no voting rights, will be sold at Anthropic’s latest valuation of $18.4 billion, sources said. Anthropic has raised around $7 billion in recent years from tech giants like Amazon, Alphabet AND Salesforce. Its broad language model competes with OpenAI’s ChatGPT.
According to sources, Anthropic founders Dario and Daniela Amodei have the right to challenge any investors. 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 through “effective altruism,” a philosophy that involves making as much money as possible and then giving it all away.
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
Although Anthropic’s founders told bankers they would not accept Saudi money, they do not intend to challenge funding from other sovereign wealth funds, including the United Arab Emirates’ Mubadala fund. According to one of the sources, the UAE-based company is actively looking to invest.
Potential buyers of FTX shares include a syndicate of new investors for Anthropic, a source said, meaning Amazon and Alphabet would not be involved. Part of FTX’s stake is purchased through special purpose vehicles, or SPVs, which allow multiple investors to pool capital. The special purpose vehicles have sent emails to venture capital firms soliciting participation, three sources said. Investment bank Perella Weinberg is handling the sale on behalf of FTX.
Representatives for Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and the Saudi Arabian Public Investment Fund, or PIF, did not immediately respond to a request for comment.
The PIF, Saudi Arabia’s sovereign wealth fund, has more than $900 billion in assets and has invested capital in technology to diversify the nation’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 familiar with 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” sought to modernize the economy and strengthen ties in global finance. The PIF has investments in companies including Uberalso funding the LIV golf league and investing heavily in professional football and tennis.
Anthropic’s national security concerns about Saudi Arabia may involve dual-use technology: software or technology that can be used for both civilian and military applications. This is an area of significant concern to the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investment from particular sources in certain areas. Saudi Arabia is also moving closer to China.
The human rights situation in the kingdom remains a major issue for some Western partners. The most notable case in recent years was the alleged killing of Washington Post journalist Jamal Khashoggi in 2018, an event that triggered an international backlash in the business community.
In November, Bankman-Fried was convicted of seven counts related to the collapse of FTX. He is scheduled to be sentenced next week and prosecutors are recommending a sentence of 40 to 50 years.
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