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Anthropic Snubs Saudi Investment Amid AI Boom

Pioneering startup, has taken a bold stance by rejecting investments from Saudi Arabia in the sale of 8%
March 25, 2024

Anthropic, an AI startup, has made a strategic decision to exclude Saudi Arabian investments in the sale process of 8% of its shares linked to FTX’s bankruptcy proceedings, citing national security concerns.

As reported by CNBC, executives at Anthropic have emphasized these concerns, leading to the exclusion of Saudi Arabia from potential investors. The move underscores the company's commitment to safeguarding its interests amidst evolving geopolitical dynamics.

Three years ago, Bankman-Fried acquired the stake for $500 million. With the recent surge in interest in AI technologies, the value of the stake has soared to over $1 billion, positioning Anthropic as a lucrative investment opportunity.

The proceeds from the stake sale will be directed towards repaying FTX customers, with the transaction expected to be finalized within the coming weeks, according to insiders with knowledge of the negotiations.

Sources indicate that Anthropic's class B shares, devoid of voting rights, are being sold based on the company's latest valuation of $18.4 billion, reflecting investor confidence in its growth prospects.

Anthropic has garnered significant backing from tech giants like Amazon, Alphabet, and Salesforce, amassing approximately $7 billion in funding in recent years. The company's cutting-edge language model competes directly with OpenAI's ChatGPT, positioning it as a frontrunner in the AI landscape.

While founders Dario and Daniela Amodei maintain the right to scrutinize potential investors, they are presently uninvolved in the fundraising process or discussions concerning FTX's stake. The Amodei siblings were introduced to Bankman-Fried through the concept of "effective altruism," underscoring Anthropic's commitment to philanthropic endeavors.

In a contrasting development, despite Anthropic's stance against Saudi Arabian investments, the company remains open to funding from other sovereign wealth funds, including the United Arab Emirates' Mubadala. Reports suggest that Mubadala is actively considering an investment in Anthropic, highlighting the company's allure to global investors.

The sale of FTX's shares has attracted a syndicate of new investors for Anthropic, excluding tech giants Amazon and Alphabet. Perella Weinberg, an investment bank, is overseeing the sale on behalf of FTX, leveraging special purpose vehicles (SPVs) to facilitate the transaction.

Meanwhile, Saudi Arabia's sovereign wealth fund, PIF, continues its tech investment spree, exploring collaborations with venture firm Andreessen Horowitz to establish a $40 billion AI-focused fund. This aligns with Saudi Crown Prince Mohammed bin Salman's "Vision 2030 Initiative," aimed at modernizing the economy and fostering global financial partnerships.

However, Anthropic's apprehensions regarding Saudi Arabia stem from national security concerns, particularly surrounding dual-use technology. This aligns with the scrutiny of foreign investments by entities like the Committee on Foreign Investment in the United States (CFIUS), reflecting heightened vigilance over strategic sectors.

As the landscape evolves, Anthropic's decision reflects a delicate balance between financial opportunities and national security imperatives, underscoring the intricate intersections of technology, geopolitics, and investment strategy.

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