Anthropic could beat OpenAI to IPO, and that could put it ahead financially

Anthropic is reportedly preparing for an IPO early next year. This could help it raise substantial sums of money that could allow it to leapfrog OpenAI.

One of OpenAI's main rivals in the AI space is Anthropic, with its Claude models. Rumors now suggest that Anthropic is in early talks to launch as one of the largest Initial Public Offerings (IPOs) as early as next year. The company is believed to have engaged the law firm Wilson Sonsini Goodrich & Rosati, which has experience working on high-profile tech IPOs, such as Google, LinkedIn, and Lyft.

According to the Financial Times (via Reuters), internal preparations for a potential listing are already underway. The former Airbnb executive, Krishna Rao, has apparently been hired for his experience with Airbnb's 2020 IPO. Anthropic has also been discussing the potential IPO with major investment banks, but sources say those talks are preliminary and informal.

What is an IPO?

An IPO, or an Initial Public Offering, is a process in which a company moves from being a private company with private shares to a public company with shares anyone can buy through brokerages (digital stock trading apps have democratized access over the last decade). By selling shares to the public, Anthropic is able to raise substantial capital that it can redeploy to further grow the business.

The main drawback to going public is that shareholders will be demanding continual financial growth from Anthropic. This could mean that more features will become paid-for features, subscription costs could go up, and the things you get for free now may be further restricted.

Competition with OpenAI

Anthropic's main rival is OpenAI; the news that Anthropic is preparing for an IPO comes amid speculation that OpenAI is also preparing for a public offering. It will be interesting if Anthropic beats OpenAI to IPO, as it could allow it to seize the initiative from the company that launched the first widely used large language model.

Questions remain

Even if the rumors are true and Anthropic does go for an IPO, it's an open question how it goes from burning through money to delivering profits for shareholders. We also don't know what price shares will sell for initially. If it goes ahead, it will be interesting to see if Anthropic is able to leapfrog OpenAI, financially.