AI Investment War: VCs Break Taboo, Backing Both OpenAI and Anthropic

Overview

According to Bloomberg, OpenAI and Anthropic are working to close two of the largest funding rounds in history, increasingly leaning on an overlapping pool of investors—breaking the traditional venture capital taboo against funding competing startups.

Major VCs Investing in Both Companies

The following major investors hold stakes in both OpenAI and Anthropic:

Sequoia Capital

Sequoia, which initially backed OpenAI in 2021, is expected to invest in Anthropic's latest financing round.

Altimeter Capital

Altimeter, which has previously described OpenAI as its largest investment ever, is poised to invest more than $200 million in Anthropic's current deal.

Blackstone

Major alternative asset manager Blackstone is negotiating to increase its stake in Anthropic to one billion dollars after previously investing in OpenAI.

Big Tech Giants

Amazon, NVIDIA, and Microsoft have all reportedly discussed plans to invest in both OpenAI and Anthropic.

Others

JPMorgan Chase's growth equity arm and Iconiq also hold stakes in both companies.

Breaking Traditional Taboos

The venture capital industry has traditionally avoided simultaneously investing in directly competing startups due to conflicts of interest and risks of competitive information leakage.

However, the AI frenzy is overturning these norms. Investors judge both companies to be too large and important to miss out on either one.

Funding Scale

According to CNBC, Anthropic recently closed a funding round above $10 billion and could go higher. Yahoo Finance reports Anthropic's total funding could reach more than $20 billion.

OpenAI is also reportedly preparing a funding round of similar scale.

Implications of the AI Investment Frenzy

This phenomenon provides several important insights:

1. Strategic Importance of AI

Investors view AI as becoming core infrastructure for the future economy, prioritizing participation in the AI market over traditional investment principles.

2. Hedging Strategy

Uncertain which company will ultimately win, investors are diversifying risk by betting on both sides.

3. Capital Concentration

AI development requires massive computing resources and talent, meaning only a few well-capitalized companies can compete at the frontier. This may strengthen oligopolistic structures in the AI industry.

Concerns and Challenges

This overlapping investment raises some concerns:

Conflicts of Interest: Information management issues if investors simultaneously participate on competing boards

Weakened Competition: Possibility of genuine competition weakening when the same investors support both sides

Market Concentration: Risk of a few large investors dominating the AI market

Conclusion

The overlapping investment in OpenAI and Anthropic symbolizes the AI industry growing to unprecedented scale. Even traditional venture capital principles are being reconsidered before the massive AI opportunity, and this is expected to significantly impact the structure and competitive dynamics of the AI industry going forward.