When Anthropic went looking for more money to support its pursuit of building artificial intelligence models, the startup turned to a familiar network of venture capitalists. It also opened the door to a source of capital it had previously ignored: Middle Eastern sovereign wealth.
Anthropic named the Qatar Investment Authority as a “significant” investor in a $13 billion financing round that valued the company at $183 billion. That puts Doha’s wealth fund on a list that already includes Amazon.com Inc., Goldman Sachs Group Inc. and a slew of prominent venture capital firms, while vaulting Qatar into a race with its deep-pocketed Gulf neighbors for AI deals.
The QIA praised Anthropic for its prowess in coding automation and business uses. “It’s definitely found its niche in the enterprise,” Mohammed Al-Hardan, head of technology, media and telecommunications at the $524 billion fund, said in an interview.
The funding marks a turning point for Anthropic, which has positioned itself as a more responsible alternative in AI. Its Chief Executive Officer Dario Amodei has long raised concerns about handing authoritarian regimes access to advanced AI models, and Middle Eastern funds weren’t part of previous funding rounds.
Amodei appeared to soften his stance ahead of Anthropic’s recent fundraise, underscoring the importance of the region’s deep pools of capital. Rival firms have already turned to the region — Abu Dhabi’s MGX invested in OpenAI last year and was named as one of the backers for the ChatGPT maker’s Stargate infrastructure project, while Elon Musk’s xAI has raised funds from the QIA, MGX and Saudi Arabia’s Kingdom Holdings.
The QIA was the sole Gulf investor in a list of more than 20 Anthropic shared on Tuesday. The deal signals Doha’s willingness to more aggressively deploy cash into the sector and reassert itself despite a recent setback with Builder.ai’s messy bankruptcy. The fund is seeking to spend half a trillion dollars in the US over the next decade as its gas-fueled coffers balloon further, positioning it as an even more prominent force in Silicon Valley.
Anthropic is one of many more AI deals to come, according to Al-Hardan. While the fund didn’t lead the startup’s latest funding round, it might choose to do so on future deals, writing early-stage checks or as companies near public listings.
“You would see us doing it all,” Al-Hardan said. “The luxury that we have — that the other funds don’t have — is that, because our mandate is so wide, we get to choose.” That includes planned investments in chips and media, as well as an ongoing push into China.
Trophies to Tech
Set up in 2005 to manage the country’s bountiful revenue from liquefied natural gas, the QIA quickly developed a reputation for a fund with a penchant for so-called trophy assets; it splashed out on stakes in Credit Suisse Group AG, the London Stock Exchange Group Plc and the iconic Harrods.
It began shifting to tech, backing venture capital firms and startups directly, in 2021, the year before OpenAI released ChatGPT and set off a flurry of investments. Both the United Arab Emirates and Saudi Arabia have launched multibillion-dollar funds targeting companies developing new models, chips and data centers — and established their own national AI champions. Qatar, in contrast, has moved relatively more gingerly.
The QIA entered tech and AI for strategic reasons, as well as a way to avoid “falling behind” more prominent Gulf states, according to Sara Bazoobandi, a research fellow at the German Institute for Global and Area Studies, who tracks Middle Eastern funds. “There is always a flying geese pattern,” she said. “As soon as one enters a new market, sector or region, the rest tend to follow.”
The QIA now expects to do as many as 25 deals in technology this year and next, up from an average of between 10 and 15 transactions annually by Al-Hardan’s team across software, semiconductors, media and communications. Still, Al-Hardan acknowledges the pitfalls of plowing money into the sector.
“A lot of these companies are still not mature,” he said. “With anything in AI, there’s always inherent risks.”
Case in point: the QIA’s 2023 bet on Builder.ai, a British startup promising to make apps with little to no code. Two years on, the firm fell apart after investors discovered the former CEO had allegedly overinflated sales. The QIA held a board seat and became aware of the financial mishap late last year, Bloomberg News has reported. Al-Hardan declined to comment.
The QIA now takes minority positions in startups, holding less than 15% of equity, while investing less per deal: typically about $100 million, but sometimes as little as $25 million. There are exceptions, though, and Al-Hardan said the fund put a “significant check” in 2023 in Databricks Inc., a software firm recently valued at more than $100 billion.
"Unsung Firms”
Since that deal, Qatar has mostly stuck with unsung AI companies selling to businesses. This year it has invested in Instabase, a startup that manages business data, in a down round, and Applied Intuition, a California-based provider for autonomous cars and drones.
It also backed Cresta, a startup focused on customer service automation. After that deal, Cresta CEO Ping Wu said the fund’s staff introduced him to other Gulf investors at an event in Doha, and have shown little appetite for interfering with his business. “They’re patient, permanent capital,” Wu said.
The QIA’s high-profile investment in xAI didn’t come until late last year, when it participated in a $6 billion round, driven in part by Musk’s access to data from his social network and Tesla Inc. The fund has also previously backed Musk’s X and Neuralink, his brain implant company.
The fund’s recently appointed CEO Mohammed Al-Sowaidi will be an added advantage as it scouts for more deals in the US. The executive spent most of his early years at the fund in the Americas, where he helped establish a US office and eventually became the region’s chief investment officer. He plans to steer the QIA toward providing capital to large companies, taking stakes in listed firms and prioritizing bigger deals, focusing on data centers and health care.
To help with that push, six of Al-Hardan’s team of about 30 people are in New York. While there are currently no plans to open an office in Silicon Valley, someone from the team is there “every other week,” the executive said. With its series of tech deals, senior executives at the fund, including Al-Hardan, have developed direct ties with some of Silicon Valley’s largest investors.
Among the long list of AI firms the QIA looks at, he singled out tech that can instantly generate music, photos or videos as the “most interesting” area in media. The fund is currently looking at a startup in the sector, he said, with plans to integrate it with North Road, a studio run by Hollywood luminary Peter Chernin and backed by Qatar.
The fund says it will continue to look at AI model developers as potential deals. Eventually, Al-Hardan said, these firms — currently bleeding money as they race to build commercial operations — will diverge into profitable lanes.
“Each and every one one of these companies will evolve differently,” he added.
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