Anthropic, the developer of the Claude chatbot, filed a confidential S-1 draft with the Securities and Exchange Commission on June 1. The move unofficially began the countdown toward the day that one of the world's hottest artificial intelligence (AI) companies will start trading on the public market.
It will be one of the largest initial public offerings (IPOs) in history. The company's most recent fundraising round in late May gave it a valuation of $965 billion. So it's already one of the world's most valuable companies, and that's before most public investors get a shot at buying shares.
But if you really want to get some portfolio to Anthropic before it goes public, you can. Here are four paths, ranked from the easiest and cheapest to the most exclusive and expensive. As they say, where there's a will, there's a way.
Image source: Getty Images.
1. Invest in Anthropic's major partners
Amazon and Alphabet are two of Anthropic's largest backers, and were among its earliest. Both have invested in and work closely with it on cloud services and AI chips.
Investors won't know precisely how large either company's stake in Anthropic is until its public S-1 filing comes out. However, based on reports and previous regulatory filings, estimates put Amazon's stake at between 15% and 20%, and Alphabet's at about 14%.
Amazon and Alphabet are two of the world's most prominent tech companies, and their dominance across cloud computing, e-commerce, digital advertising, and AI offer reasons enough to own them, making their Anthropic stakes icing on the cake. For those investors who don't already own them, they're probably the most straightforward path to Anthropic exposure.
2. Buy an ETF that's invested in Anthropic
Exchange-traded funds, or ETFs, are always a useful tool for investors who don't want to put in the extra work and take on the extra risk involved with owning and managing a portfolio of individual stocks. Many ETFs stick to public stocks, but the KraneShares Artificial Intelligence and Technology ETF (AGIX -1.29%) invests in both public and private companies.
NASDAQ: AGIX
Key Data Points
Anthropic is currently the ETF's largest private investment, at about 1.7% of net funds. That's not a large slice, but it does give investors a way to get exposure to Anthropic right now, and AGIX is a diversified fund with over five dozen holdings. It charges an annual fee of 0.99%, which seems reasonable for access to Anthropic and a few other private companies.
3. Private market funds present another choice
Moving deeper down the rabbit hole, investors can look to the private markets. That's where they will find closed-end funds, such as the ARK Venture Fund (ARKVX +1.39%), which also invests in a combination of public and private companies. These funds are more exclusive than ETFs; they raise limited amounts of capital, typically aren't publicly traded, charge higher fees, and require higher minimum investments.
NASDAQMUTFUND: ARKVX
Key Data Points
The ARK Venture Fund has significantly greater exposure to nonpublic AI companies than AGIX. Anthropic and OpenAI make up about 6.4% and 8.5% of the fund, respectively. The ARK Venture Fund's gross annual fee is 3.49%, which might be too high to be worth it to some investors. Still, the private markets are often one of the best ways to get meaningful investment exposure to a company like Anthropic.
4. The secondary market is an option for some
The final and most direct route to investing in Anthropic is also the most difficult path: People can buy actual shares of Anthropic and other nonpublic companies on the secondary market. However, these opportunities are typically limited to professional investors and high-net-worth individuals, who might gain access to those investments through their connections with brokerages or other market makers.
Going that route also brings a laundry list of complexities. It's far more difficult to trade on secondary markets, and the transaction fees and minimum investment requirements one encounters will be higher than with the other three options.
Overall, this is not a realistic option for most investors, but it is available to the lucky few. For the rest of us, the other three choices are still open. Or, one could just wait for Anthropic's seemingly inevitable IPO.
