Unpacking the Washington Math for a big payout deal

Anthropic and the new rules for AI dealmaking

Coming up with innovations in the field of artificial intelligence is hard work. That includes raising the seemingly endless amounts of capital needed to finance it, as startups like Anthropic illustrate.

To finance the increasing levels of computing power are required for AI operations, Anthropic has raised more than $7 billion from tech giants like Amazon and Google, as well as from investors led by venture capital firm Menlo Ventures.

But amassing that money has forced Anthropic — along with rivals like OpenAI and Cohere — into existence more creative in its fundraisingErin Griffith and Cade Metz of The Times report:

In one such deal, Anthropic agreed to use technology such as chips and cloud computing services from the companies that invested in it. That essentially meant that some of the money raised would be pumped back to investors. And to consolidate smaller investors interested in Anthropic, Menlo created a legal entity known as a “special purpose vehicle.”

“These deals are so complicated,” said Dave Brown, vice president of Amazon Web Services and involved in Amazon's deal with Anthropic.

Despite AI's promise to transform every aspect of society, it has begun to upend the deals of Silicon Valley startups. Young companies typically raise money every fifteen months after they have shown that their business has grown. But since generative AI – which can generate text, images, sound and video – arrived on the scene in late 2022, the rules have been thrown out as investors have fought for a slice of the hottest developers.

The dealmaking has come to the attention of the FTC, which is reviewing Anthropic investments for possible antitrust violations. Anthropic told The Times it planned to work with the regulator, while Amazon and Google said the investments and cloud credit arrangements were made at arm's length.

• In other AI news: The head of Google DeepMind, Demis Hassabis, told Wired that the future of the technology won't necessarily revolve around products are getting bigger.

The coming week

The Fed, earnings and artificial intelligence will be the focus this week. Here you can read what you should pay attention to.

Wednesday: The Fed will release the minutes of its January interest rate meeting, giving investors new clues about its timeline for cutting rates. Higher-than-expected inflation data over the past week has forced traders to scale back their bets on upcoming cuts.