OpenAI Competitor Anthropic Secures $450m In Latest Funding Round, With Google As Backer
The central theses
- Generative AI company Anthropic has raised $450 million in its Series C funding round led by Spark Capital and backed by Google and Zoom
- The company has a ChatGPT competitor named Claude whose funding is used for further development
- Google hopes its involvement (and Bard’s advancement) will help catch the early lead in the “AI wars” that Microsoft has taken with its support of OpenAI
Anthropic AI, creator of the mysterious Claude chatbot and a potential serious competitor to OpenAI’s ChatGPT, has announced that it has raised $450 million in its latest funding round. The news comes at a time when the company’s fortunes are growing, having already announced partnerships with Google Cloud and Zoom in recent months.
As the company goes from strength to strength, it emphasizes that funds will go towards AI security as well as further development of its Claude model. That’s good to hear, because AI regulation is a snail’s pace compared to the speed of AI development.
Find out all about the Anthropic funding round below, including who was involved, how the funds will be used, and how the overall AI picture is evolving.
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What’s new from Anthropic?
Anthropic has announced that it has raised $450 million in its latest funding round. It was in March when Anthropic first confirmed they were fundraising, but it was only estimated at around $300 million.
Anthropic will likely hope people forget about its 2022 Series B funding round, which totaled an impressive $580 million but was led by crypto scammer Sam Bankman-Fried and his deputy Caroline Ellison. Unpleasant.
This time, the Series C funding had a completely different makeup, as venture capital firms are keen to get involved in the AI action. The funding round was led by Spark Capital, whose general partner Yasmin Razavi joins Anthropic’s board, and included companies such as Menlo Ventures, Salesforce Ventures and Ashton Kutcher’s company Sound Ventures.
Zoom Ventures, which owns video-call company Zoom, was another investor on the round. Just last week, Zoom announced its partnership with Anthropic, in which the video conferencing software company will initially integrate Anthropic’s Claude AI system into its Zoom contact center portfolio.
Google was another supporter of the round, having reportedly invested between $300 million and $400 million earlier in the year. After being somewhat surprised at how quickly generative AI has come to market, the search giant is likely seeking a partnership similar to Microsoft’s multi-year $10 billion investment with OpenAI.
Crunchbase estimates that the generative AI company now has around $1.45 billion in outside investment (SBF’s investment reportedly accounts for a third of that total). The company is said to be worth over $4 billion.
What will Anthropic use the funds for?
Anthropic has been developing its ChatGPT competitor Claude for some time and first introduced the model in March of this year. In a blog post, they describe it as “an AI assistant that can perform a variety of conversational and word processing tasks.” Claude has not yet been widely released, but access can be requested directly through the company.
The funds will go towards the further development of the Claude system and support “our ongoing work to develop helpful, harmless and honest AI systems”. The blog post specifically mentions continuing work on AI security — a hot topic since ChatGPT first wowed consumers and markets alike.
The AI wars are heating up
After a slow start, Google appears to be firmly entrenched in the AI competition, and this latest investment bodes well for retailers. Alphabet’s stock price is up 37% this year as the company struggled to catch up with Microsoft in the AI wars.
Google stock rose this week after a note from analysts at Bank of America suggested Bing’s search engine activity was slowing, while Google retained its huge stake. They also pointed out that Bard has the advantage of generating AI chats based on up-to-date information, whereas ChatGPT is only trained up to a certain point in time.
But Microsoft is far from giving up. OpenAI has now launched an app for ChatGPT that generated over 770,000 downloads in the first few days. Microsoft stock is up 32% this year thanks to its lead in the AI space, which integrates OpenAI’s technology into its consumer and enterprise products.
And with good reason: Investors can’t get enough of the popular new technology. The five largest stocks in the S&P 500 — Apple, Microsoft, Google, Amazon, and Nvidia — are collectively worth $9 trillion thanks to stock price rallies powered by AI news.
AI security is not keeping pace
But with chatbots like Claude, Bard, and ChatGPT, there’s a growing danger that AI will be trained on data people haven’t consented to access and, of course, on the stuff of sci-fi nightmares: an AI overlord who humanity is rapidly surpassing intelligence.
Thankfully, steps are being taken to address the issue. Last week, Sam Altman, CEO of OpenAI, and other AI experts testified before Congress to begin developing AI regulation. Altman advocated independent audits, a standard set of AI safety rules, and an agency that can issue and revoke licenses for AI companies to operate.
The EU is also pushing ahead with its artificial intelligence law, which the European Parliament voted for earlier this month. The law aims to protect creators and their copyrights by requiring AI companies to disclose the material they use to train their models.
The law also takes a risk-based approach and bans anything that sounds too scary: remote facial recognition, social scoring systems, and the use of data without consent would all be banned and fined for companies using AI for these purposes.
The final result
Anthropic’s recent round of funding is a sure sign that AI development isn’t slowing down anytime soon. Given the transformative potential of the new technology, it’s no wonder venture capitalists are jumping in early to reap the rewards once the IPO market picks up steam again.
Anthropic’s focus on security is another good sign. However, investors should keep an eye out for the latest legislative updates to ensure these startups stay on the right side of regulation when they launch — otherwise, it could have disastrous consequences for the stock.
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