In 2024, Menlo Ventures made the risky decision to raise $500 million to invest in Anthropic PBC, then an underdog rival to OpenAI that had yet to generate meaningful revenue or gain mainstream adoption like ChatGPT.
Menlo’s stake in Anthropic, including an additional $500 million in investments across several rounds, is currently worth nearly $14 billion, according to people familiar with the matter, as the artificial intelligence startup’s valuation has soared to more than $900 billion. The large gamble on Anthropic, which Menlo managing partner Shawn Carolan refers to as a “bet-the-firm moment,” is now helping to supercharge its clout and investing activity.
On Tuesday, Menlo is set to announce that it’s raised $3 billion for a set of funds dedicated to backing AI startups, marking the venture firm’s largest fundraising haul to date. As part of that, Menlo, historically focused on backing newer startups, also intends to pursue more later-stage bets similar in size to its Anthropic investment.
As part of its pivot to focus on AI over the past three years, Menlo has decided to no longer raise biology-specific funds. Menlo also staffed up its investment team with more technical expertise, Murphy said. Among others, Menlo has tapped early Glean Technologies Inc. engineer Deedy Das, Atlassian’s former Chief Product Officer Joff Redfern, and Expanse co-founder Matt Kraning to help with its AI investing strategy.
“There are a lot of investors investing in the AI space, but for a fund to have this level of deep technical insights is very refreshing for founders to see,” said Carina Hong, founder of Axiom, an AI mathematics startup backed by Menlo.
Menlo’s biggest challenge will be winning a significant enough slice of companies in competitive rounds to justify the decision to balloon its funds. That task is compounded by soaring valuations and fears that the AI bubble is due to burst.
“That’s a natural part of any technology cycle,” said Ganesan. “The way we mitigate it — not that we will escape it — is we stay disciplined on fund sizes and we try to invest in as many of the best companies as we can and concentrate.”
