More VC Firms Are Investing in AI Rivals

Does it make sense to back rival language model companies Anthropic and OpenAI (and Cohere and Mistral)? Some investors seem to think so, taking an approach to startup investing that looks a little like buying an index fund with an array of tech stocks.

Last week my colleagues and I broke the news that Sequoia Capital was among the investors in a new $6 billion fundraising for xAI, Elon Musk’s artificial intelligence startup. Sequoia’s involvement wasn’t that surprising. Since the start of last year, Sequoia has led deals for generative AI startups such as developer assistant LangChain and legal startup Harvey and has participated in dozens of others. The firm also backed Musk’s $44 billion Twitter buyout. What’s notable is that Sequoia already holds shares in an xAI rival, Sam Altman’s OpenAI, after buying shares from other holders when the startup was valued at $20 billion.