Public Service Announcement: with Anthropic, you can’t trust what you see. I’ve had 60+ calls with LPs, brokers and GPs over the last 4 days. Here’s why I think a few people (in some rare cases) will make a lot of money, but many more will lose their reputations:
- To recap, Anthropic is raising a funding round, raising $50B at ~$900B (we think).
- There will be a select number of direct investors on Anthropic's cap table, who will be allowed to purchase Anthropic shares. This group is in the process of being finalized, but (unspoken) minimum cheque sizes start at north of $500M.
- As a result almost no single investor or fund actually has the capital on hand to invest conventionally into their fund or portfolio. This means everyone is trying to raise significantly more capital than they have.
- The process goes like this: a fund believes it can get an allocation to buy Anthropic shares. The bigger the investment, the more money a fund makes. So in addition to going out to its LP base, the fund reaches out to brokers to bring net-new investors, just for Anthropic.
- This is where the broker chains begin. The prospect of getting even 10-20 basis points on a $500M+ allocation would make a broker’s year. So brokers reach out to not only their networks, but also to other brokers to solicit investors for Anthropic. And those brokers reach out to other brokers.
- These daisy chains can be 5-6 brokers long. And I’ve seen so many brokers in the middle who don’t understand the structure, are unfamiliar with the original fund, will shop around 5 different blocks with no curation… All they want to do is get a potential investor (any investor’s) proof of funds and send it back to a fund (any fund) which /might/ end up being on Anthropic’s cap table.
- That’s why every allocator is getting inundated, and verifying supply (at this stage, when allocations are still being settled) is nearly impossible.
In the next two weeks, a few people will make a lot of money, but infinitely more will have their reputations and credibility irreparably damaged. The real winners will be those players (funds brokers, and investors) who prioritize clarity, honesty, and professionalism, and those who build long-term relationships.
As someone who has been in the ecosystem for 8+ years, I’ve seen a lot of this. The Snapchat and (various) SpaceX hype cycles were similar (👀 Hari Raghavan), but since the industry is SO much bigger now, the chaos is exponential.
If you’re a current or prospective LP, if you’d like to chat, feel free to reach out. We can make sense of this together.