As OpenAI nears the completion of a new $100 billion funding round, and Anthropic has just wrapped up its remarkable $30 billion funding, it’s evident that the notion of investor “loyalty” is precariously hanging by a thread. 

Earlier this month, a minimum of a dozen direct investors in OpenAI were revealed as supporters in Anthropic’s $30 billion funding campaign, among them Founders Fund, Iconiq, Insight Partners, and Sequoia Capital. 

Some overlapping investments are logical if they originate from the hedge fund or asset management sectors, where the primary focus remains on investing in public equities (whether competitors or not). These comprise D1, Fidelity, and TPG.  

One of these instances was somewhat surprising. Affiliated funds from BlackRock participated in Anthropic’s $30 billion funding round, despite BlackRock’s senior managing director and board member Adebayo Ogunlesi also serving on OpenAI’s board of directors. 

In that realm, it’s accurate that if various BlackRock funds have the opportunity to invest in OpenAI stock, they are likely to proceed, set aside the personal link of a member of their upper management. (BlackRock manages every variety of fund, including mutual funds, closed-end funds, and ETFs). And we’re all aware of the history between OpenAI and Microsoft, as well as Microsoft’s strategy to hedge its investments. The same goes for Nvidia. 

However, venture capital funds have — until this point — functioned differently.

VCs present themselves as “founder friendly” and “supportive,” suggesting that when a VC firm acquires a stake in a startup, the investor will assist that startup in achieving success, especially against its significant competitors. If you own stakes in both OpenAI and Anthropic, to whom does your loyalty truly belong, apart from your own investors?  

Furthermore, startups operate as private entities. They generally disclose sensitive information to their direct investors about their operational status — data that remains undisclosed publicly as it does with publicly traded companies. In numerous instances, the VCs also secure board positions, which entails an additional level of fiduciary duty to their portfolio firms. 

What makes this situation particularly intriguing is that Sam Altman hails from the venture capital sector, being a former president of Y Combinator. He understands the dynamics. Reportedly in 2024, he provided his investors with a list of OpenAI’s competitors that he preferred they did not support. This list largely contained companies established by individuals who departed OpenAI, including Anthropic, xAI, and Safe Superintelligence. 

Altman subsequently refuted claims that he told OpenAI investors they would be excluded from future funding rounds if they endorsed his list of perceived competitors. He did acknowledge that he indicated if they “engaged in non-passive investments,” they would no longer receive OpenAI’s confidential business information, as per documents in the lawsuit between Elon Musk and OpenAI, Business Insider reported. 

AI is disrupting the norms owing to the unprecedented sums of capital that leading AI laboratories are securing as they encounter unparalleled growth (along with unprecedented data center demands). At some point, when the call for funding is widespread, the demands are immense and the potential returns are substantial, who can be anticipated to decline? 

It turns out not every venture investor has yet slid down this slippery slope. Andreessen Horowitz supports OpenAI, but not (as of now) Anthropic. Menlo Ventures backs Anthropic but not (as of now) OpenAI, for example.

In fact, according to our admittedly incomplete exploration, we identified a dozen investors that seem to solely possess direct investments in one of these entities, not both. 

Others encompass Bessemer Venture Partners, General Catalyst, and Greenoaks. (Note: We initially requested Claude to compile the list of dual investors. It provided almost as many incorrect entries as correct ones, so all this for a rather impressive technology whose output sometimes proves less reliable than an intern’s.)

Nevertheless, as we previously noted, the fact that this traditional guideline has been disregarded by some of the most esteemed firms in the Valley, like Sequoia, is significant. One investor we contacted simply shrugged and stated that as long as the firm does not hold a board seat, no one perceives any issue with it anymore.  

Nonetheless, conflict-of-interest protocols should now become another aspect that founders inquire about before endorsing that term sheet, regardless of the source.