Anthropic IPO valuation talks slide after tech selloff

Anthropic's seven co-founders will keep majority control of the shareholder vote after the company goes public. According to the revised prospectus, Founder LLC, an entity the co-founders own, will hold a single Class F share carrying 50.1% of voting power on general shareholder matters. A separate Long-Term Benefit Trust will be able to elect and remove directors who make up a majority of the board, The Financial Express reported. In practice, public investors will be able to own Claude's maker but not steer it, even as one of the largest technology listings on record gets closer.financialexpress.com

How the control works

Anthropic will have five classes of stock, and the public can buy only Class A shares. Those will trade on the Nasdaq ↗ 0.36% under the ticker "ANT," with one vote per share. However many Class A shares exist, together they can never hold more than 49.9% of the vote, Fortune reported. The filing warns that Class A holders "generally will not be able to affect the outcome of any matter submitted to a vote of our stockholders or the election of our directors, regardless of how they vote."fortune.com

The Class F share has no economic rights, and issuing new stock cannot dilute it. The Wall Street Journal News Corp ↗ 0.62% reported that CEO Dario Amodei, President Daniela Amodei and the five other co-founders will each have an equal say in how it is voted. The founders' control ends if fewer than three of the seven remain in the LLC for 90 days. The trust's Class T share has no expiration date, according to Fortune.wsj.com+1

The philanthropy pledge

In the filing, Anthropic says the co-founders "have each pledged to dedicate 80% of their personal equity in Anthropic to philanthropic causes," a commitment Fortune estimated could be worth nearly $80 billion. The S-1 calls the pledges "voluntary, revocable expressions" of intent. A co-founder keeps a seat in the LLC as long as they hold 2% of their IPO-era stock. The filing also acknowledges that as the founders give shares away, their economic interest will shrink "while their voting control through the Founder LLC will remain unchanged."fortune.com

Valuation under pressure

The IPO had been expected to value Anthropic at $1.5 trillion to $2 trillion, with trading expected to start in mid-November after a roadshow, Caixin reported. Those expectations have since fallen. On Friday, November 6, Bloomberg reported that potential buyers are now discussing a range of $1.2 trillion to $1.3 trillion, after a post-election selloff in tech stocks. Formal IPO marketing is set to begin next week. The Wall Street Journal separately reported that one prospective investor suggested the valuation could approach $1 trillion, according to Philstar.caixinglobal.com+2

The filing itself admits the governance setup may not go over well with investors. "We cannot predict whether our structure will result in lower demand for our Class A common stock, increased volatility, adverse publicity, or other adverse consequences," it says, as quoted by Fortune.fortune.com