(Bloomberg) – In the quiet days before Christmas last year, when most venture capitalists had retreated to holiday escapes in Aspen or Jackson Hole, Lightspeed Venture Partners' Investment Team was considering an application for an Openai Anthropic opponent.
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The Capital Capital company contacted anthropic with a proposal to lead a billions of dollars investment, according to a person familiar with the matter. A deal developed quickly: a $ 2 billion funding round at a valuation of $ 60 billion, tripling what was the value of the initial company a year earlier. By the beginning of January, the deal was effectively completed.
With $ 25 billion being controlled, Lightspeed is part of rare layers of VC companies that are ready and can support hottest, and most expensive technology companies. In addition to Anthropic, Lightspeed has recently participated in a major funding round for the Artificial Intelligence Company Databricks Inc. It sold it at $ 62 billion, as well as investment in Xai Elon Musk at a $ 50 billion valuation.
AI megadeals have become an integral part of the top -tier VC diet despite the risks, including that companies have not yet proven that they can benefit from these investments.
“It's a high -end boker,” said Sierra Ventures Management Partner, Tim Guleri, AI investor.
In the past three months alone, Xai, Openai and Anthropic have risen by more than $ 20 billion to support their extensive computer costs. Those deals together put value on the three companies on more than $ 250 billion. Overall, new AI businesses from the United States rose a highest ever $ 97 billion in 2024, according to Pitchbook data.
For venture capitalists, there are increasing pressure – especially on those who missed the opportunity to support the best AI companies at lower prices – to align themselves with the leading players before it's too late, investors say. Lightspeed and Anthropic representatives refused to comment for this story.
“It shows you are in the game,” said Peter Werner, co-chair of the Cooley Menter Cooley Capital Practice Practice Group. “What you don't want to be is an Enterprise Fund that is trying to be in the mix, losing out or developing a reputation that you are not fit enough to enter the best and hotest rounds.”
Vc shift
Lightspeed was founded more than 20 years ago on the heels of the dot-com bust by Barry Eggers, Christopher Schaepe, Peter Nieh and Ravi Patre, who led the anthropic negotiations. He is best known for smart investments in consumer technology, financial technology and enterprise software, making early bets on companies such as Snap Inc., Affirm Holdings Inc. and Rubrik Inc. Despite its history, the company has not yet become a familiar name as some of the most famous VC tier players. With its aggressive AI bets, insighters say these deals could raise their status permanently – if they succeed.
Like much of the VC industry, Lightspeed has redirected its attention to new AI businesses, supporting early stage companies such as music company Suno Inc. and Pika's initial video company, as well as larger players. In December, he separated with his two Lead Consumer investors and said he adapted his consumer investment strategy to better suit “AI age.”
In total, Lightspeed has already invested $ 2.2 billion in AI deals, a figure that does not include his latest anthropic investment, according to another person who is familiar with the issue. Soon, it will have extra fire power to be thrown at the hungry companies for cash. It is nearing the end of a fundraising period that is expected to bring in $ 7 billion, says a person familiar with the matter. A Lightspeed spokesman refused to comment on the fundraising. He reported the information earlier on fundraising efforts.
The company's anthropic investment is one of the most ambitious to date. And while the $ 60 billion worth may seem staggering, Lightspeed partners are hopeful that the deal will some day look like a deal.
“Overall, it feels like the valuations are expensive because we see a lot of activity and lots of bargains being made,” said Lightspeed Lightspeed Chahal at last year's Tech Fortune Braintorm conference. “When you look back, every round, at the time, seemed extremely expensive and, looking back, was incredibly cheap.”
Major AI bargains remain a source of debate in Silicon Valley. While the largest companies seem like the most transformative, some venture capitalists argue that participating in huge funding rounds will not give technology investors the gains they need to satisfy their fans. Those investors target smaller AI apps and services, rather than the giants such as Anthropic and Openai, which are about developing the industry's expensive building blocks.
The recent increase in AI megadeals also speaks to a wider change in VC: a deviation from the traditional early -stage investments strategy, where companies get more money at stake at lower valuations. Now, VC companies are paying a large premium, and betting that a small number of AI companies could eventually be worth over $ 1 trillion.
The increasing size of VC funds has also required companies to write larger checks, Weber said. Instead of aiming for huge multiples on their investment, companies “do not necessarily try to find home runs, they are trying to find ways to double their money,” he said.
“There are only so many iconic, generation pre-IPO companies today,” said IVP general partner Ajay Vashee. “If investing is your mandate at that stage, then you have to find opportunities to implement your capital.”
A shaky start
The race to find those opportunities is full of risks, including regulatory uncertainty, fierce competition and increased infrastructure costs for leading AI developers.
Investors fear their AI bets may be short, leaving companies open if the bubble bursts. Already, the sector has seen some billion-dollar companies stumble.
For example, Lightspeed co-led a high profile investment in Stability AI, the developer of the Stable Diffusion image generator priced at $ 1 billion in 2022. Shortly thereafter, a number of key developers of the business resigned in the midst of increasing tensions with ' The Mercurial Chief Executive Officer Mostaque, legal proceedings and financial difficulties. Mostaque resigned from the company in early 2024. Since then the company has appointed a new CEO and raised additional capital, Bloomberg reported.
Lightspeed is also a major investor in Mistral, the open -source company from Paris who is now competing against a series of better -funded models.
Of course, Lightspeed and other best VC companies are hopeful that placing several bets in competitive companies will bring at least one large AI winner. If not, the result could be significant.
“You can't lose too many games from this high poker,” said Guleri of Sierra Ventures. “That's the risk of the strategy.”
