Google Bets $2 Billion on AI Startup Anthropic, Signs Cloud Agreement
Google Bets $2 Billion on AI Startup Anthropic, Signs Cloud Agreement - Google has committed to invest $2 billion in the artificial intelligence (AI) company Anthropic, strengthening its ties with the rapidly rising startup and fueling Silicon Valley's frenzy for AI.
This deal is structured as a convertible note, a type of debt that will be converted into equity in the next funding round of the startup, a spokesperson for Anthropic confirmed.
This investment follows another significant convertible note investment in Anthropic from Amazon.com Inc., up to $4 billion earlier this year.
With the latest funding, Alphabet Inc.'s Google is investing $500 million with a commitment to add another $1.5 billion in the future, according to people familiar with the matter who requested anonymity due to its private nature.
This investment is in addition to the $550 million Google put into Anthropic earlier this year.
Prior to the funding, Google also signed a major cloud agreement with Anthropic, according to one person familiar with the details.
The cloud agreement, in which Anthropic will use Google's computing services, is even larger than the recent investment and will last for several years, the person said.
The Wall Street Journal reported Google's investment details earlier.
Megadeals
The string of deals involving Anthropic this year is partly led by the new recruit, Vu Bui, their Chief Financial Officer and Strategic Investor Relations, who started working in September, according to his LinkedIn profile.
Bui has played a crucial role in organizing the company's discussions with investors, one of the people said.
Anthropic's next step might be to raise traditional funding, rather than convertible debt. At that point, Google and Amazon shares will be converted into equity, and the company will receive a new valuation.
Anthropic has been discussing valuations between $20 billion and $30 billion, according to those people, a price considered too high by some investors.
At the beginning of the year, the startup had a valuation of about $5 billion, according to PitchBook data.
The company is unlikely to rush to raise more money, however, because their recent investments from Google and Amazon have meant they have enough cash on hand, the people said.
Rival Cloud
For Google and Amazon, investing in startups like Anthropic is a way to build relationships with companies shaping the next wave of AI and encourage them to use their exclusive cloud tools.
Google and Amazon are two leaders in global cloud computing services. They fiercely compete to win large customers like Anthropic, which require significant computing resources to run their AI models.
Anthropic was founded in 2019 by a group of leading AI scientists who previously worked at OpenAI, a nonprofit organization backed by Elon Musk and Peter Thiel.
Anthropic aims to create artificial general intelligence (AGI), a form of AI that can perform a wide range of human tasks or even surpass human capabilities.
The company is still very secretive about its projects. However, one of its products known to the public is Claude 2, a sophisticated chatbot that can answer questions on various topics and even make jokes.
Claude 2 was developed using Google's cloud technology, which provides Anthropic with access to large-scale computing infrastructure and advanced AI tools such as TensorFlow and JAX.
With the new investment from Google, Anthropic hopes to accelerate their research and development in AI and expand their team, which currently consists of around 100 people.
