Anthropic's First Fundraising Round: 21 Rejections
Main Topics
Anthropic's challenging first fundraising experience
Early skepticism from venture capitalists about AI/ML breakthroughs
Comparison with OpenAI's fundraising success
The eventual Amazon partnership breakthrough
Challenges in educating investors about new technology
Key Points
21 Rejections: Anthropic faced significant investor pushback during their initial fundraising round
Investor Knowledge Gap: VCs lacked understanding of fundamental AI breakthroughs, with some not even knowing what GPT-3 was
Proof Problem: Investors wanted evidence despite the revolutionary nature of the technology
Reframing Strategy: The pitch needed to shift from a $500 million ask to a $100 million seed round
Competitive Context: OpenAI had already raised ~$1 billion, making Anthropic's ask seem more reasonable
Value Proposition: Anthropic's core concept was delivering "a unit of intelligence for six times less" (cost efficiency)
Amazon Breakthrough: Amazon understood the strategic value by observing Azure + OpenAI dynamics, leading to a $4 billion compute and capital equity partnership
Difficult Journey: The founding team (Dario, Tom, Daniela, Jack, Sam McCandlish, Jared Kaplan) endured harsh conditions during this period
Notable Quotes
> "These are the guys who invented GPT-3. How much more proof do you want?"
> "What's GPT-3?"
> "How do you go about educating somebody who doesn't even understand the technology and the breakthroughs that are happening in the machine learning community?"
Takeaways
Investor Education Required: Early-stage deep tech founders must educate investors about paradigm-shifting technology
Persistence Matters: 21 rejections preceded eventual success—persistence through rejection is critical
Right Investors Win: Amazon's strategic understanding of competitive landscape (vs. traditional VCs) proved decisive
Timing & Context: Framing the pitch within OpenAI's precedent made the ask more legible
Founder Resilience: Building breakthrough companies requires emotional and mental fortitude from the entire team
We got 21 no's. And I was like, what are you guys thinking? And they said, well, Dan, this recipe sounds good in theory, but where's the proof? These are the guys who invented GPT-3. How much more proof do you want? And they said, what's GPT-3? Oh my God, how do you go about educating somebody who doesn't even understand the technology and the breakthroughs that are happening in the machine learning community? Now, I was lucky because I had that training from grad school. I'd started a computer vision company.
We originally tried to go out and raise 500 million and then had to re-anchor to only raising $100 million seed round, which at the time felt like a lot, but of course was tiny compared to how much OpenAI had raised because by then I think OpenAI had already raised a billion dollars. And so the whole idea, a unit of intelligence for six times less, was not like the VCs did not understand it. This was very legible to Amazon because they were watching what was happening with Azure and OpenAI and they were like, well, this is super aligned. And that's why it resulted in this deep compute and capital for equity partnership with Amazon that was originally $4 billion.
But at the time, it was a really tough journey and I would give Dario, Tom, Daniela, Jack, Sam McCandlish, Jared Kaplan. It was such a brutal time getting this company going. which at the time felt like a lot, but of course was tiny compared to how much OpenAI had raised because by then I think OpenAI had already raised a billion dollars. And so the whole idea, a unit of intelligence for six times less, was not like the VCs did not understand it. This was very legible to Amazon because they were watching what was happening with Azure and OpenAI and they were like, well, this is super aligned. And that's why, you know, it resulted in this sort of deep compute
and capital for equity partnership with Amazon that was originally $4 billion. But at the time, it was a really tough journey and I would give Dario, Tom, Daniela, Jack, Sam McCandlish, Jared Kaplan. It was such a brutal time getting this company going.