Anthropic closes in on $300 million in new funding for AI

Anthropic, a San Francisco artificial intelligence startup, is set to raise about $300 million in new funding, two people with knowledge of the situation said, in the latest sign of feverish excitement for a new class of AI start-ups.

The deal could value Anthropic at around $5 billion, although the terms are still being worked out and the valuation could change, one of the people said. The startup, which was founded in 2021, previously raised $704 million, valuing it at $4 billion, according to PitchBook, which tracks private investment data.

Silicon Valley has been gripped by a frenzy of start-ups working on “generative” AI, technologies capable of generating text, images and other media in response to short prompts. This week, Microsoft invested $10 billion in OpenAI, the San Francisco startup that caused a stir in November with a chatbot, ChatGPT. ChatGPT has wowed over a million people with its knack for answering questions in clear, concise prose.

Even as funding for other start-ups has dried up, investors have been looking for deals in similar AI companies, signaling that the otherwise bleak market for tech investing has at least one silver lining.

Other ongoing funding deals include Character.AI, which lets people talk to chatbots who pose as celebrities. The start-up had discussions around a large round table, according to three people familiar with the situation.

Replika, another chatbot company, and You.com, which is deploying similar technology in a new type of search engine, also said they had attracted unsolicited investor interest.

All specialize in generative AI. The result of more than a decade of research at companies like OpenAI, these technologies are poised to remake everything from online search engines like Google Search and Microsoft Bing to photo and graphics editors like Photoshop.

The explosion of interest in generative AI is pushing investors and start-ups to choose their teams. Startups want to take money from the most powerful investors with the deepest pockets, and investors are trying to pick winners from a growing list of ambitious companies.

The stakes are high. Venture capitalists generally do not support multiple companies in the same category for competitive reasons. So a bad bet now could lead to a missed opportunity to make money on other trades.

Despite the excitement, few of these start-ups have a clear plan for making money. This has rarely been a problem in Silicon Valley; previous generations of investors poured money into social media sites or mobile apps assuming they would figure out how to make a profit later.

But that strategy has been less of a safe bet in recent years, as startups have expanded beyond the tech industry’s daily bread of selling software or selling ads. Some companies, like on-demand delivery, ride-sharing apps, and subscription meal kits, have taken longer to make money than investors expected or haven’t made any money at all. everything.

Anthropic was founded by a group of people including several researchers who left OpenAI. Its funding talks stand out from its past backers. The vast majority of its funding came from disgraced cryptocurrency entrepreneur Sam Bankman-Fried and his colleagues at FTX, the cryptocurrency platform that went bankrupt last year on fraud charges. . This money could be recovered by a bankruptcy court, leaving Anthropic in limbo.