Anthropic Discusses Going Public as Soon as the Fourth Quarter
The Takeaway
- Anthropic discusses IPO as soon as Q4, with bankers expecting over $60 billion raise.
- Anthropic’s annualized sales doubled to $19 billion in the first two months this year.
- Bankers expect Anthropic to list before OpenAI due to market preference for its focus.
Anthropic executives have discussed an initial public offering of the AI firm’s shares as soon as the fourth quarter this year, according to people familiar with the matter.
Bankers vying to take Anthropic public expect the company to raise more than $60 billion in the initial public offering, said some of the people. That could be the second-biggest such deal after SpaceX, which is expected to raise as much as $75 billion in an IPO as soon as this summer. The figures won’t be decided until just before the offerings.
Companies typically sell between 10% and 25% of their total equity in an IPO, so bankers typically base their estimates of how much money a company will raise in an IPO by predicting the company’s estimated valuation at the time of the offering, plus other factors such as investor demand.
While Anthropic is discussing more specific timing for an IPO, such planning can change on a dime and can also be influenced by macroeconomic events. The company, last valued at $350 billion in a financing last month, could still decide not to go public at all. But it is taking concrete steps toward an offering, such as working with law firm Wilson Sonsini, according to a person familiar with the matter.
Archrival OpenAI is also gearing up to go public as soon as possible, and CEO Sam Altman has said privately he would prefer to list the ChatGPT maker’s share before Anthropic goes public, according to people with knowledge of the comments. The company is close to raising $120 billion at a $730 billion valuation before the financing, so it isn’t under financial pressure to list its shares, said a person with knowledge of the situation.
The debut of OpenAI and Anthropic shares would be a landmark moment in the AI boom, which has boosted the shares of major cloud and chip firms that cater to OpenAI, Anthropic and other key developers. Anthropic has experienced staggering revenue growth this year; annualized sales more than doubled to $19 billion during the first two months this year, on the strength of its automated coding tools, and is closing its revenue gap with OpenAI.
Meanwhile, OpenAI, powered by subscription sales from ChatGPT, topped $25 billion in annualized sales last month. Anthropic in December projected its business would generate cash as soon as 2028 and OpenAI, earlier this quarter, projected positive free cash flow by 2030, though OpenAI previously projected it would burn more than $200 billion before then.
Anthropic, in contrast, previously projected—optimistically—that it would burn around $22 billion before generating positive free cash flows. (Read more about each companies’ finances here, here and here.)
Bankers and lawyers who work on IPOs largely expect Anthropic to list shares before OpenAI does, as they believe public market investors would favor Anthropic’s focus on selling to developers and enterprises rather than consumers and its shorter projected path to profitability.
IPO advisers say that as Anthropic and OpenAI discuss their potential offerings with regulators, their differing methods of booking revenue related to cloud providers that resell their AI models will almost certainly come up, as will the ways the companies have projected unprecedented revenue growth and server costs.
The two companies’ IPO timing could heavily depend on the broader market conditions. The Iran war and rising oil prices have prompted worries about increased inflation and lower consumer spending, which could impact IPO activity and when ultimately the two AI labs go public. The Financial Times previously reported an Anthropic IPO could happen this year.
OpenAI has had informal conversations with banks Goldman Sachs, which advised OpenAI on its restructuring process last fall with veteran banker Michael Klein, and Morgan Stanley, said a person familiar with the discussions.
Both companies are competing to win over coveted business customers owned by private equity firms. Anthropic is in talks to form a joint venture with private equity firms including Blackstone and Hellman & Friedman and Permira, according to people familiar with the discussions. OpenAI also discussed a similar joint venture with private equity firms TPG, Advent International, Bain Capital and Brookfield Asset Management.
