Anthropic has decided not to buy Israeli AI startup Decart for about $6 billion after completing due diligence, Bloomberg reported, citing people familiar with the matter. Representatives for both companies declined to comment to Bloomberg, and one of the people said the two may still find other ways to work together.
Bloomberg first reported the talks in August. According to Globes, the companies had signed a letter of intent but never reached signing and closing, so Anthropic could walk away without paying Decart a penalty.
What Anthropic wanted
Decart is best known for its world models, but the deal was about chip efficiency. Its optimization stack is designed to make chips do more work across training and inference, and the idea, per Bloomberg, was to let Anthropic’s existing compute absorb more customer demand, The Next Web reported. Decart’s own website promises to “squeeze every ounce of performance from every chip.”
The startup’s other business is world models trained on text and video, with uses ranging from autonomous driving to online retail. Its Lucy model takes live video of a person and generates video of them wearing different clothes, a virtual try-on tool, and eBay is both an investor and a customer, according to TNW.
Decart raised $300 million in May in a round led by Radical Ventures, with Nvidia, Adobe Ventures, Valor Equity Partners and Atreides Management joining earlier backers Sequoia Capital, Benchmark and Zeev Ventures. The Wall Street Journal put that round’s valuation near $4 billion, up from $3.1 billion the previous August, so a $6 billion price would have been roughly a 50% markup four months later, TNW noted.
Why it fell apart
Nobody involved has said what ended the talks. Globes reported that Anthropic insisted Decart’s founders and top engineers move from Tel Aviv to San Francisco. Founders Dean Leitersdorf, Orian Leitersdorf and Moshe Shalev, who hold 64% of the company, refused and wanted to stay in Israel. Decart’s Israeli development center has about 100 employees, who under Anthropic’s plans were supposed to relocate to California. Sources close to Decart told Globes that Anthropic had been enthusiastic about the technology.
Bloomberg’s own reporting, as summarized by Globes, raised other possibilities: that Anthropic wasn’t impressed enough with the technology, decided it could build or buy something similar for less, or found Decart’s business too small. Ctech asked whether the efficiency gains held up at very large scale, and noted that Decart is a three-year-old company with annual revenue running at several tens of millions of dollars.
Timing likely played a part too. Anthropic rarely makes big acquisitions, and its most notable before this was $400 million for a team of fewer than 10 people, TNW reported. The company is preparing for an initial public offering that Ctech said was expected within the next two months, and it hasn’t yet published a prospectus.
What it means for Decart
Ctech warned that few buyers would rush to acquire a company Anthropic examined so closely and passed on. Before Anthropic, Decart held talks with other companies, with Nvidia reportedly the furthest along and willing to pay more, but the founders preferred Anthropic’s offer, much of it in Anthropic shares. Nvidia is now busy with its $12.9 billion acquisition of Hugging Face, which it announced the week before.
A commercial agreement for Decart’s efficiency software, rather than an acquisition, is the option to watch, TNW wrote, since it would give Anthropic the same benefit without needing to be explained in a prospectus.
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