Norms fading, investors make bets on Al rivalry

Venture capital firms long sought to avoid conflicts. In this duel, some go with all sides.

- BY REBECCA TORRENCE AND NATASHA MASCARENHAS

JOSH KUSHNER is the founder of Thrive Capital, which is supporting OpenAI over competitor Anthropic.

(DAVID PAUL MORRIS Bloomberg)

OpenAI and Anthropic are working to close two of the largest funding rounds in history and increasingly leaning on an overlapping pool of investors to meet their immense capital needs — a practice that was once taboo in startup land.

Sequoia Capital and Altimeter Capital, for example, both are expected to invest in Anthropic’s latest financing, which is set to bring in more than $20 billion. Sequoia first backed OpenAI in 2021 and invested in several of the company’s rounds since. Altimeter, which has said OpenAI was its biggest bet ever, is set to invest more than $200 million in Anthropic’s latest deal, according to a person familiar with the matter who asked not to be identified discussing private information.

The growing trend highlights how much the top few AI developers are scrambling the venture funding landscape. Silicon Valley investors historically have gone to great lengths not to bet on rival startups — choosing instead to pick a winner and back them to the end, avoiding perceptions of a conflict of interest. But with artificial intelligence breakthroughs creating a feeding frenzy for tech investors, those old rules are increasingly defunct.

“When you talk about OpenAI and Anthropic, these are generational companies, the likes of which we may not see again in our lifetimes,” said Ethan Choi, a partner at Open AI-backer Khosla Ventures. “In the face of that, some VC firms have lowered the bar for conflicts.”