Wealthy sovereign wealth funds are among investors clamoring for a stake in Anthropic, the hot artificial intelligence startup that is challenging OpenAI. One country that has remained on the sidelines: Saudi Arabia.
As bankers formulate a group of potential new backers for Anthropic, the company has ruled out the possibility of receiving 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 up for sale as it is owned by FTX, the failed cryptocurrency exchange founded 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 pay off the debts of FTX customers. The deal is ongoing and expected to be completed in the next couple of weeks, said people familiar with the negotiations, who asked not to be identified because the talks are private.
The Class B shares, which have no voting rights, are being sold at Anthropic’s latest valuation of $18.4 billion, the people said. Over the past few years, Anthropic has raised nearly $7 billion from tech giants like Amazon, Alphabet And Salesforce. Its large language model rivals OpenAI’s ChatGPT.
Anthropic founders Dario and Daniela Amodei have the right to challenge any potential investor, sources said. However, they are not involved in the ongoing fundraising process or negotiations with potential investors for a stake in FTX. The founders were introduced to Bankman-Fried through “effective altruism”. a philosophy that involves making as much money as possible in order to give it all away.
The Crown Prince of Saudi Arabia and Prime Minister Mohammed bin Salman meet with US Secretary of State Antony Blinken (not photo) in Jeddah, Saudi Arabia, March 20, 2024.
Evelyn Hockstein | Reuters
While Anthropic’s founders have told bankers they won’t accept Saudi money, they have no plans to challenge funding from other sovereign wealth funds, including the United Arab Emirates fund Mubadala. The UAE-based firm is actively considering the investment, one of the sources said.
The potential buyers of FTX shares are a syndicate of new Anthropic investors, the source said, meaning Amazon and Alphabet will not participate. A portion of FTX’s shares are sold through special purpose vehicles, or SPVs, allowing multiple investors to pool capital. SPVs are sending emails to venture capital firms asking for 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 deal. Mubadala and Saudi Arabia’s Public Investment Fund (PIF) did not immediately respond to requests for comment.
PIF, Saudi Arabia’s sovereign wealth fund, has more than $900 billion in assets and is investing in technology to diversify the country’s oil revenues. 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 aims to modernize the economy and strengthen ties in global finance. PIF has investments in companies including Uberand also funds the LIV golf league and spends heavily on professional football and tennis.
Anthropic’s national security concerns regarding Saudi Arabia may relate to dual-use technologies—software or technologies that can be used for both civilian and military purposes. This is an area of special concern for the Committee on Foreign Investment in the United States (CFIUS), which may block foreign investment from certain sources in certain areas. Saudi Arabia has also shown sympathy for 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 murder of Washington Post journalist Jamal Khashoggi in 2018, an event that sparked an international backlash in the business community.
In November, Bankman-Fried was found guilty of seven counts related to the collapse of FTX. His sentencing is scheduled for next week, and prosecutors are recommending a prison sentence of 40 to 50 years.
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