OpenAI Rival Anthropic Taps Google and Others to Raise $2 Billion

OpenAI Rival Anthropic Taps Google and Others to Raise $2 Billion

UTC by Bhushan Akolkar · 3 min read
OpenAI Rival Anthropic Taps Google and Others to Raise $2 Billion
Photo: Unsplash

With the massive fundraise, Anthropic will focus on making significant developments on Claude Next and increase spending to boost its AI model.

A week after raising $1.25 billion from tech giant Amazon, OpenAI rival firm Anthropic has tapped Google and others to raise an additional $2 billion in fresh funding. Google had already picked up a 10% stake in Anthropic last year in 2022. Sources familiar with the matter stated that Google is planning to raise its stake further.

The two-year-old startup, known for its chatbot Claude, a competitor to OpenAI’s ChatGPT, is seeking a valuation between $20 billion to $30 billion with the new investment, according to a source familiar with the matter.

This valuation represents a fivefold increase from March when the company was valued at $4 billion by investors. It places its shares at a significantly higher price compared to OpenAI in terms of valuation multiple on revenue, reported The Information.

Anthropic, a startup established two years ago, is in the business of creating generative AI models, positioning itself as a competitor to OpenAI. Its primary offering is Claude 2, a chatbot with functionalities akin to ChatGPT. Claude 2 can craft marketing content, tackle mathematical problems, and engage in meaningful conversations with humans.

Nevertheless, Anthropic has grand ambitions for an even more potent model called Claude Next. This model is extraordinarily resource-intensive, to the extent that even the world’s most advanced supercomputers would struggle to support it. Consequently, the company is actively seeking substantial capital to advance its development.

Anthropic Focusing on Claude Pro

Anthropic has highlighted the substantial expenses associated with running its AI models as a primary driver behind its introduction of a paid subscription service named Claude Pro. This service allows users to send a higher volume of messages and enjoy priority access during peak usage periods.

The financial demands of AI are considerable. Earlier this year, OpenAI made headlines for reportedly spending a staggering $21 million each month on cloud-based graphics processing units and other computational resources required to power ChatGPT.

In pursuit of its ambitious goal to create an even more robust generative AI model, Anthropic has actively sought funding from various investors this year. Besides Amazon, SK Telecom Co. Ltd. has also thrown its support behind the startup with a $100 million investment in August. In March, Anthropic successfully closed a substantial funding round amounting to $450 million, with contributions from major players such as Google, Salesforce Ventures, and Zoom Ventures.

Leaked documents earlier in the year revealed Anthropic’s aspirations to raise up to $5 billion over the next two years to develop Claude Next. These documents indicate that the new model aims to be ten times more powerful than any existing generative AI system on the market. Achieving such capabilities would require access to computing infrastructure capable of delivering a staggering 10 septillion floating-point operations per second (FLOPs), represented by a one followed by 25 zeros. This is several orders of magnitude greater than the quintillion FLOPs, which is the typical performance level of today’s most powerful supercomputers.

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