AI Giant Anthropic Abandons $6 Billion Deal for Israeli Startup Descartes

Artificial intelligence company Anthropic, the developer of the popular chatbot Claude, has decided to withdraw from a potential acquisition of Israeli startup Descartes, a deal reportedly valued at approximately $6 billion. The decision was reported by Bloomberg on Tuesday. Anthropic had been in negotiations and conducted due diligence for the company but ultimately chose not to proceed with the acquisition.

However, a source familiar with the matter indicated that both companies might explore other forms of collaboration in the future. Representatives for both Anthropic and Descartes declined to comment on the report. Descartes develops software designed to reduce the costs of training and operating AI systems by improving the efficiency of the chips they run on.

Anthropic, which typically avoids large acquisitions, is currently undergoing a period of significant investment in computing power for new product development and customer services, in anticipation of its upcoming initial public offering on Wall Street. The company aims to raise a sum comparable to, or potentially exceeding, that raised by SpaceX in its IPO.

The expected acquisition was seen as a move by Anthropic to transfer a substantial part of its operations to Israel, positioning Descartes' team at the forefront of developing what is considered the 'holy grail' of AI: artificial general intelligence (AGI).

Descartes was founded in late 2023 by Dr. Dean Leitersdorf and Moshe Shalev, who met during their military service in Unit 8200. Dr. Orian Leitersdorf, Dean's younger brother, later joined them. The Leitersdorf brothers are descendants of a prominent business family known for owning the Shalom Tower in Tel Aviv and are considered among Israel's brightest tech minds. Dean Leitersdorf became the youngest Israeli to complete a doctorate at the Technion at age 23, a record recently broken by his brother Orian.

Unlike many startups, Descartes generated millions of dollars in revenue within months of its founding, thanks to its technology that significantly accelerates AI processing speed. The company developed and trained its AI models using its own data, enabling continuous improvement in model quality and optimization of training and inference processes, which are the primary products sold by companies like Anthropic. This technological depth allowed Descartes to impress figures like Elon Musk, who reacted with a "Wow" to Descartes' video model capable of generating continuous video via AI, surpassing competitors' shorter clips.