Anthropic Wants $40B Valuation and Funding Plans
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Today on the podcast, I'm going to be breaking down a whole bunch of news related to one of our favorite AI startups, Anthropic, because they have floated raising money at a $40 billion valuation. They also have some big news about their $4 billion deal with Amazon that has recently passed some of the antitrust scrutiny over in the UK. There's a lot that goes down to the whole antitrust thing, and I think we've seen a

caught up in it. There's a bunch of pending cases, and I think it's going to be a very big thing in the future. So I want to actually break this thing down in a little bit more detail, essentially what's happening with Anthropic there, but you'll also get a lot about the entire industry and what you're going to see with other places. Before I get into all of that, I wanted to say that today's episode is sponsored by my very own school community. Not really sponsored. I'm just telling you about it. If you're interested in starting your own AI side hustle, using AI to make money,

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So back to Anthropic, the thing that I think is really interesting here, the information kind of broke the story. They always have these exclusive takes. Um, this one is the fact that Anthropic, which of course is opening eyes, biggest competitor. Um, they're talking to a bunch of different investors, uh,

raising money and their latest valuation is $30 to $40 billion. Now, this is pretty interesting because OpenAI is just closing out their current funding round at $150 billion. So even if they got the higher end of the scale at $40 billion, you know, they're still more than three times smaller or lower evaluation than OpenAI.

And I guess that makes sense because Anthropic definitely isn't as big as OpenAI. They're not as robust as far as all the products they offer. But as far as the ChatGPT competitor side, very, very competitive. I know a ton of people that have both ChatGPT and Anthropic. Some people that only use Anthropic. A lot of people tell me it is way better for development. I have a lot of people that use it for marketing that say the tone of Anthropic is a lot better for getting just text and content generated. So Anthropic is definitely a really big player in...

Now, for those that are like, forget where Anthropic kind of came from, it was the CEO of Anthropic had a falling out with Sam Altman from OpenAI about three years ago and started the company, left OpenAI and started Anthropic and started creating Claude and all of the other different tools after that. So very, very interesting. What I do think is interesting with this is the way that they're going about or trying to raise this money. So

Based off of some documents that the information saw, it looks like Anthropic is going to be kicking off this fundraise in a little bit of a unique way. They're going to be presenting to some investors at Morgan Stanley's private tech conference in Los Angeles. That's going to be next month.

And what's interesting to me about that is typically this is not the way that startups go raise money. They usually go to venture capital firms and other places. They don't usually go to investment banks when they're looking to get money.

in investments unless it's really, really complex how the round has been put together. Now, this is something that you could imagine having sovereign wealth funds or a bunch of corporate investors in. Those are kind of the more complex types of rounds. And this is exactly what I believe Anthropic is doing. So in the past, they've raised a lot of money from corporate, right? They've got $4 billion from

Amazon, which I'm going to talk about in a minute because that is also an interesting story. And of course, they've got $2 billion from Google, a bunch of other places that they've been raising money from. So I believe based off of this, and it looks like what they're saying is they plan on continuing to raise money from corporate investors again. Now, all of this to me is very, very interesting because the way they do a lot of these corporate deals is that they

You know, they've done deals with Google Cloud where they got free compute. They've done deals with Amazon where they're also getting compute. So, you know, a lot of this could be doing it with corporate people where they're like using it to lower their cost of goods. But in any case, all of this goes towards training their cloud chatbot, which then, of course, they have subscriptions that kind of pay for that. So.

Really interesting fundraise. I'll be really interested to see all of this. Of course, this is not very cheap. By the end of this year, Anthropic is set to be

generating about $800 million in annualized revenue by the end of this year, meaning it's not actually going to have generated $800 million, but by the end of the year, it will be on track to generate $800 million by the end of its next 365 days. So kind of sneaky how they do that or about $66 million in revenue per month. So in any case,

This is pretty fantastic. It shares a big chunk of that with Amazon, which also resells the cloud model to a lot of its cloud customers. And I think Anthropix Net Revenue, after the payout that they do,

to Amazon is probably 25, 50% lower than the numbers that I was just mentioning before. So all of this comes at a pretty steep cost. The company previously projected that it was going to burn more than $2.7 billion this year. So you

It sounds fantastic that they're going to be on track to make $800 million, but spending $2.7 billion is a lot of money. Absolutely insane numbers. So it's going to be interesting to see where this goes. Now, in relation to that whole deal, there's other news coming out around that whole Anthropic Amazon deal.

Apparently, that deal has just been cleared by a UK antitrust authority that said Amazon's partnership and equity investment in Anthropic can't be investigated under the current merger rules because of the size and scope of the deal. So that's something that TechCrunch put out talking about it. Now, I want to talk about what's specifically interesting with this case and why that is. So a lot of these are coming out of the CMA. This is the UK's Competition and Markets Authority.

What's interesting is this is six months after Anthropic and Amazon announced that they were going to be doing this deal. And even further back in the past when Anthropic really started working with Amazon AWS and making deals, but then this really big $4 billion deal was about six months ago. So six months later, we have this UK antitrust. People say, oh no, it's good. You guys are good to do this. Would they really have changed things? They've already been taking money. They've already been growing. I don't know. To me, it just seems crazy. This UK...

you know, antitrust group or whatever wants to just put a stamp of approval on it just to say that, look, we have a say. You got to like think about us, whatever. In any case, the reason why this is so important is because, you know,

Anthropic is not even based in the UK. It's a San Francisco-based startup. Amazon is also a USA-based company. And I guess the reason why the UK concluded that it was

They didn't actually say like, hey, we think your deal's good. They just said, we can't investigate your deal. And the reason for that is because that it didn't meet the 70 million, yeah, the 70 million euro threshold to qualify for investigation. And that's specifically their UK turnover, meaning in the United Kingdom, they're not making more than that. So they don't really get to do that. It's kind of interesting to me though, because it's a very, I believe it's the same one or a similar UK agency that blocked, yeah,

Adobe from acquiring Figma. And that was a multi-billion dollar deal that got completely blocked and shut down. Adobe was not able to acquire Figma. And that wasn't even because like in the United States, there was regulatory things, even though Figma and Adobe are both USA based. It was because of some group in the UK that blocked it. So to me, this is very, very fascinating. Um,

that it's agencies in the UK that are blocking United States tech companies from doing mergers and stuff. It's a very, very tricky time. And so because of that Adobe and Figma deal that got blocked, now all of these companies are essentially doing acqui-hires. So you see with Microsoft, they essentially came in and instead of just straight up buying, they just went and

paid a chunk of change to get Inflection's whole team that had raised a billion dollars and Mustafa Selim and kind of their leadership. So very, very interesting time right now. But all of this is kind of switching the way that these deals are done. People are investing, acqui-hiring, but they're not straight up doing acquisitions anymore. So very, very interesting. But in any case, Anthropic has been cleared of this Amazon deal. They're not going to get investigated on it. And it looks like

smooth sailing for them to go and try to raise their $40 billion. To keep you updated on all of that, if you're interested in making money from AI tools or growing your business, make sure to join our school community, AI Hustle. Their link is in the description and I will catch you next time.