AI Start-up Anthropic Files Confidentially for IPO. Here's What Investors Need to Know

Investors are likely already familiar with Anthropic, the start-up behind the Claude family of chatbots and large language models (LLMs). The company believes that artificial intelligence (AI) "will have a vast impact on the world." It goes on to say it is "dedicated to securing [AI's] benefits and mitigating its risks."

In a statement posted on its website, the company revealed it has submitted regulatory filings and could go public as early as next month.

Image source: Getty Images.

A trillion-dollar valuation?

Anthropic said it "confidentially submitted a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission (SEC) for a proposed initial public offering (IPO) of our common stock." This marks the first step toward going public. The confidential filing allows the company to keep financial results and other sensitive information private until the SEC completes its review of the submission.

As a result, we don't yet know when Anthropic plans to go public, how many shares it plans to issue, or the proposed price range for those shares.

That said, there is some information that Anthropic has already made public. Last month, the company announced that it had raised an additional $65 billion in its most recent funding round, giving Anthropic a valuation of $965 billion on the private markets and making it the world's most valuable AI start-up. For context, rival OpenAI's most recent valuation was $730 billion.

The company also revealed that its revenue run rate had ballooned to $47 billion, up from $10 billion a year ago. Reports suggest that Anthropic is on track to achieve its first profitable quarter in Q2, targeting an operating profit of $559 million, though the company has yet to confirm these reports.

The company identifies as a public benefit corporation (PBC), a corporate structure that permits for-profit businesses to balance their pursuit of profits with a positive impact on society, shielding the company and its executives from certain shareholder lawsuits.

Anthropic competes most directly with OpenAI and its flagship ChatGPT. It also competes indirectly with Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) and its Gemini suite of products. However, Google's massive ecosystem of AI-related offerings, along with its search and cloud infrastructure, makes it less of a direct competitor. Emarketer (via CNN) estimates that nearly 37% of internet users will use ChatGPT this year, compared to 27% for Gemini and 5% for Claude, so the battle for chatbot supremacy is ongoing.

Anthropic made waves earlier this year when its Claude Mythos Preview frontier model identified thousands of zero-day vulnerabilities. The company said (emphasis mine), "Mythos Preview has already found thousands of high-severity vulnerabilities, including some in every major operating system and web browser."

This development sent shockwaves through the cybersecurity industry, prompting Anthropic to announce Project Glasswing, a partnership with some of the world's most high-profile companies to plug security holes identified by Mythos. Its project collaborators include Nvidia, Amazon Web Services (AWS), Apple, Google, Broadcom, Microsoft, and Cisco. Other partners include cybersecurity bigwigs CrowdStrike and Palo Alto Networks.

This is just one example of how Anthropic has positioned itself as a dominant force in AI.

More to come

Some market commentators have suggested Anthropic would benefit by being the first mega AI start-up to go public, positioning itself as the leader and dictating the valuation benchmark for pure-play AI companies. Furthermore, by being the first to IPO, it could capture a larger share of the limited public market capital available for companies in the AI space.

We don't have all the details and won't know more until Anthropic files a revised S-1 with the SEC. Until then, investors should keep in mind that while the company certainly has potential, there are likely undisclosed risks as well.

That said, Anthropic isn't yet public, so investors have time to consider the implications of its upcoming IPO and review the additional information once it becomes publicly available, or invest in one of the company's early investors.

Danny Vena, CPA has positions in Alphabet, Amazon, Apple, Broadcom, CrowdStrike, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Broadcom, Cisco Systems, CrowdStrike, Microsoft, and Nvidia. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.