Deep-pocketed, sovereign wealth funds are among the investors vying for a stake in Anthropic, the red-hot artificial intelligence startup taking on OpenAI. One country that is being left out: Saudi Arabia.
As bankers line up a group of potential new Anthropic backers, 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 up for sale as it belongs to 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. An 8% stake is now worth more than $1 billion thanks to the recent boom in AI.
Proceeds from the sale will be used to pay FTX customers. The transaction is ongoing and on track to be completed in the next two weeks, said people with knowledge of the negotiations, who spoke on condition of anonymity because the talks are private.
Class B shares, which do not come with voting rights, are being sold at Anthropic’s closing price of $18.4 billion, the sources said. Anthropic has raised about $7 billion in the past few years from tech giants like Amazon, the alphabet And Sales force. Its large language model competes with OpenAI’s ChatGPT.
Anthropic founders Dario and Daniela Amodei reserve the right to challenge any potential investors, according to sources. However, they are not involved in the current fundraising process, or in discussions with potential investors in FTX shares. The founders were introduced to Bankman-Freud by “effective altruism,” a philosophy that involves making as much money as possible to give it all away.
Saudi Crown Prince and Prime Minister Mohammed bin Salman meet with US Secretary of State Anthony Blanken (not pictured) on March 20, 2024 in Jeddah, Saudi Arabia.
Evelyn Hockstein | Reuters
While Anthropic’s founders have told bankers they won’t accept Saudi money, they don’t plan to challenge funding from other sovereign wealth funds, including the UAE’s fund exchange. According to one of the sources, the UAE-based firm is actively considering the investment.
Potential buyers of FTX shares include a syndicate of new investors for Anthropic, one of the sources said, meaning Amazon and Alphabet would not be involved. Part of FTX’s shares are being bought through special purpose vehicles, or SPVs, which allow multiple investors to pool capital. SPVs are e-mailing venture firms to participate, three sources said. Investment bank Perella Weinberg is handling the sale on behalf of FTX.
Representatives for Anthropic and Perilla 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.
The 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 firm Andreessen Horowitz to create a $40 billion fund to invest in AI, two sources familiar with the matter told CNBC. The conversation was 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 global finance. PIF has investments in companies including Uberwhile LIV also funds a golf league and spends heavily on professional soccer and tennis.
Anthropic’s national security concerns regarding Saudi Arabia may extend to dual-use technology — software or tech that can be used for both civilian and military applications. This is an area of ​​particular focus for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investment from certain sources in certain areas. Saudi Arabia is also warming 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, which sparked an international outcry in the business community.
In November, Bankman-Fried was indicted on seven criminal counts related to the collapse of FTX. He will be sentenced next week, and prosecutors are recommending a sentence of 40 to 50 years.
Watch: Prosecutors recommend 40-50 years in prison for SBF.