Deep-pocketed sovereign wealth funds are among the investors vying to take a stake in Anthropic, a hot artificial intelligence startup competing with OpenAI. One country was excluded: Saudi Arabia.
Anthropic has ruled out funding from Saudi Arabia as bankers look for a potential new group of backers, people familiar with the matter said. One of the sources told CNBC that Anthrotic executives cited national security as the reason.
Anthropic’s shares are being sold because it was owned by FTX, the failed cryptocurrency exchange founded by Sam Bankman-Fried, and is being sold as part of the company’s bankruptcy proceedings. FTX purchased the shares three years ago for $500 million. Thanks to the recent boom in artificial intelligence, this 8% stake is now worth over $1 billion.
Sales proceeds will be used to repay FTX customers. The deal is underway and expected to close in the coming weeks, people familiar with the matter said. The person spoke on condition of anonymity because the negotiations are private.
The non-voting Class B shares will be sold at Anthropic’s latest valuation of $18.4 billion, sources said.Anthropic has raised about $7 billion from tech giants over the past few years Amazon, letter and sales force. Its large language model competes with OpenAI’s ChatGPT.
Anthropic founders Dario Amodei and Daniela Amodei have the authority to challenge any potential investors, sources said. However, they are not involved in the current financing process or in discussions with potential investors for FTX shares. The founder got to know Bankman-Fried through the following channels: “Effective Altruism” The philosophy is to make as much money as possible and then give it all away.
Saudi Arabia’s Crown Prince and Prime Minister Mohammed bin Salman meets with U.S. Secretary of State Antony Blinken (not pictured) in Jeddah, Saudi Arabia, March 20, 2024.
Evelyn Hochstein | Reuters
Although Anthropic’s founders have told bankers they will not accept money from Saudi Arabia, they do not plan to challenge money from other sovereign wealth funds, including the Mubadala Fund of the United Arab Emirates. According to sources, the UAE-based company is actively seeking investment.
Potential buyers of FTX stock include Anthropic’s new consortium of investors, which means Amazon and Alphabet won’t be involved, sources said. Part of FTX’s stake was purchased through a special purpose vehicle (SPV), which allows multiple investors to pool capital. The special purpose vehicle has been sending emails to venture capital firms soliciting participation, three sources said. Investment bank Perella Weinberg represented FTX in the sale.
Representatives for Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and Saudi Arabia’s Public Investment Fund (PIF) did not immediately respond to requests for comment.
PIF is Saudi Arabia’s sovereign wealth fund, which has more than $900 billion in assets and has been pouring money 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 people familiar with the matter told CNBC. The discussion was first reported by The New York Times.
Saudi Arabia’s Crown Prince Mohammed bin Salman’s ambitious Vision 2030 initiative aims to modernize the economy and strengthen global financial ties. PIF invests in companies including Uberwhile also sponsoring the LIV golf league and investing heavily in professional football and tennis.
Anthropic National security concerns for Saudi Arabia may lie in dual-use technology — software or technology that can be used in both civilian and military applications. This is an area of concern for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investment from specific sources in certain areas. Saudi Arabia has also warmed up its attitude towards China.
Saudi Arabia’s human rights record remains a major issue for some Western partners. The most high-profile case in recent years was the alleged murder of Washington Post reporter Jamal Khashoggi in 2018, which sparked a backlash from the international business community.
In November, Bankman-Fried was found guilty of seven criminal counts related to the FTX debacle. His sentencing is scheduled for next week, with prosecutors recommending a sentence of 40 to 50 years in prison.
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