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Sequoia Capital to Focus on AI Companies Utilizing Foundation Models

Venture capital firm Sequoia Capital is focusing its investment strategy toward artificial intelligence (AI) applications following the success of its investment in OpenAI. 

Roelof Botha, partner at Sequoia Capital, said that while Sequoia Capital has been a long-time investor in OpenAI, the firm is not actively seeking investments in companies involved in the development of AI technology, Bloomberg reported Monday (Oct. 2). He explained that their funds are not designed to cover the substantial costs associated with building large language models (LLMs) and other media equivalents known as foundation models. 

Sequoia Capital’s core funds primarily target early-stage companies that interact with foundation models rather than create them, according to the report. The report cited companies like Anthropic and Cohere as examples of firms building foundation models. Instead, Sequoia Capital has invested in AI companies that utilize foundation models, such as Harvey, a service that leverages LLMs for legal use, including due diligence.

Although AI is a central part of Sequoia Capital’s investment strategy, Botha emphasized that the firm remains interested in other areas like healthcare and defense technology, the report said.

Another venture capital firm, Sapphire Ventures, said in July that it has committed an investment of more than $1 billion to cultivate the next generation of AI-powered enterprise technology.

Sapphire’s AI investment strategy focuses on backing B2B software companies that are making AI easily available by leveraging data to predict better outcomes.

“AI represents a profound technology shift, and our $1 billion commitment reflects our conviction in the opportunity,” Nino Marakovic, CEO, partner and co-founder of Sapphire Ventures, said when announcing the investment. “We believe companies are only beginning to see the benefits of AI and Gen AI, specifically. Soon, we expect there to be a massive, AI-driven productivity boom that will benefit workers at every level and create value throughout the global economy.”

While some investors are focusing on AI applications, some tech giants are pumping money into Anthropic, a public benefit corporation whose corporate mission is to develop “helpful, harmless and honest” AI models. Amazon, Google, and the venture arms of both Salesforce and Zoom are among the companies backing Anthropic, PYMNTS reported Sept. 25.

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