Deep-pocketed sovereign wealth funds are among the investors clamoring for a stake in Anthropic, the hot AI startup competing with OpenAI. One country excluded: Saudi Arabia.
As bankers assemble a pool of potential new humanitarian backers, the company has ruled out taking money from the Saudis, according to people familiar with the matter. One source told CNBC that the anthropological executives cited national security.
The stake in Anthropic is up 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 over $1 billion due to the recent boom in artificial intelligence.
Proceeds from the sale will be used to reimburse FTX customers. The deal is ongoing and on track to be finalized in the next few weeks, said people familiar with the talks who requested anonymity because the negotiations are private.
The Class B shares, which do not have voting rights, are being sold at Anthropic's latest valuation of $18.4 billion, the sources said. Anthropic has raised nearly $7 billion in the last few years from tech giants like Amazon, the alphabet And Sales force. Its large language model competes with OpenAI's ChatGPT.
According to sources, Anthropy founders Dario and Daniela Amodei have the right to challenge any potential investors. However, they are not involved in the current fundraising process, or in discussions with potential investors in the FTX stake. The founders of Bankman-Fried were defined by “effective altruism,” a philosophy that involves raising as much money as possible to give 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, March 20, 2024.
Evelyn Hochstein | Reuters
While Anthropic's founders have told bankers they will not accept Saudi money, they do not plan to challenge financing from other sovereign wealth funds, including the UAE's Mubadala Fund. The UAE-based company is actively looking to invest, according to one of the sources.
Potential buyers for FTX shares consist of a group of new Anthropic investors, meaning Amazon and Alphabet will not be involved, one of the people said. A portion of FTX's stake is traded through special purpose vehicles, or SPVs, which allow multiple investors to pool capital. Three sources said the SPACs are sending emails to project companies to solicit participation. 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 Public Investment Fund did not immediately respond to a request for comment.
The Public Investment Fund, Saudi Arabia's sovereign wealth fund, has more than $900 billion in assets and is pouring capital into technology to diversify the country's revenues away from oil. The fund is in talks with venture firm Andreessen Horowitz to create a $40 billion fund to invest in artificial intelligence, two sources familiar with the matter told CNBC. The New York Times was the first to publish these discussions.
The ambitious “Vision 2030 Initiative,” launched by Saudi Crown Prince Mohammed bin Salman, looks to modernize the economy and strengthen ties in global finance. The Public Investment Fund has investments in companies including: Uberwhile also funding the LIV Golf League and spending heavily on professional football and tennis.
Anthropic national security concerns regarding Saudi Arabia could be related to dual-use technology – software or technology that can be used for both civilian and military applications. This is a notable area of focus for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investments from certain sources in certain regions. Saudi Arabia has also begun to grow closer to China.
The Kingdom's human rights record remains a major problem for some Western partners. The most high-profile case in recent years was the alleged murder of Washington Post journalist Jamal Khashoggi in 2018, an event that sparked international backlash in the business community.
In November, Bankman-Fried was convicted of seven criminal charges related to the collapse of FTX. He is scheduled to be sentenced next week, and prosecutors are recommending 40 to 50 years in prison.
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