OpenAI rival Anthropic raises $450 million in funding with backing from Google to take on ChatGPT

Despite a dramatic decline in startup funding since early 2022, generative AI startups continue to secure significant investments from deep-pocket investors. The most recent example is Anthropic, an OpenAI rival backed by Alphabet.

Today, Anthropic announced today it has closed a $450 million funding with backing from ALphabet’s Google, making it the year’s largest AI funding round since Microsoft’s $1 billion investment in OpenAI in January.

Google is among the lead investors for this round. Other backers include Salesforce Ventures, Zoom Ventures, and Spark Capital. The announcement comes just two months after Anthropic raised $300 million at a valuation of $4.1 billion.

Just prior to that, Google made a noteworthy investment of $300 million in the company, acquiring a 10% stake. It is worth mentioning that the investor listed is Google itself, rather than one of Alphabet’s investment divisions such as GV or CapitalG.

We covered Anthropic back in March after the Alphabet-backed AI startup launched Claude, a large language model that competes directly with OpenAI’s ChatGPT. Claude is designed to perform tasks similar to ChatGPT’s. Its main function is to generate text that is similar to human writing when prompted, regardless of the task at hand, be it editing legal contracts or writing computer code.

Anthropic came into the spotlight following the popularity of ChatGPT. Now Anthropic team has just released its own chatbot to take on ChatGPT, the popular chatbot developed by their former employer.

The popularity of OpenAI ChatGPT has now led to a boom in the adoption of generative artificial intelligence (AI) and big tech companies and small startups alike are in a race to integrate it into their products. Since its launch in November, ChatGPT has impressed many experts with its writing ability, software coding, proficiency in handling complex tasks, and its ease of use.

In May 2021, the startup raised $124 million in funding from high-profile investors led by Skype co-founder Jaan Tallinn, with participation from former Google CEO Eric Schmidt, James McClave, Dustin Moskovitz, and the Center for Emerging Risk Research, among others.

Based in Silicon Valley, Anthropic was founded in 2021 by OpenAI’s former VP of research Dario Amodei (CEO), Jack Clark, Sam McCandlish, and Tom Brown. Sensing that generative artificial intelligence is going to have a major impact on the world, Dario struck out with his sister Daniela to create “large-scale AI systems that are steerable, interpretable, and robust.” Before co-founding Anthropic, Daniela Amodei was OpenAI’s vice president of safety and policy.

Anthropic is working to build reliable, interpretable, and steerable AI systems. For now, the startup is primarily focusing on research towards these goals; down the road, we foresee many opportunities for our work to create value commercially and for public benefit, the company said on its website.

“This is definitely a big deal in the generative AI space,” said Ali Javaheri, an associate research analyst at PitchBook. It “shows that OpenAI is not the only player in the game, that it’s still a very competitive space,” he said.

In a blog post, Anthropic said: “Our team is focused on AI alignment techniques that allow AI systems to better handle adversarial conversations, follow precise instructions and generally be more transparent about their behaviors and limitations.”