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

Artificial intelligence leader Anthropic has abruptly canceled its planned acquisition of Israeli startup Decart AI for a staggering $6 billion. The deal, which would have been Anthropic's largest acquisition to date, collapsed after extensive due diligence revealed significant technological and business model concerns.

Decart, founded three years ago by Dean and Orian Leitursdorf along with Moshe Shalev, aimed to develop optimization software to maximize chip performance and reduce AI model training costs. However, Anthropic's review raised doubts about Decart's scalability for massive deployments and its fluctuating business strategy, which had shifted between video tools like Lucy and simulation platforms like Oasis. Concerns were also raised about the founders' long-term commitment to the company.

The collapse of the deal leaves Decart in a precarious position. The startup had previously been in advanced talks with chip giant Nvidia, an existing investor, which was reportedly willing to offer an even higher sum. However, Decart's founders opted for Anthropic's offer, largely composed of stock, seeking alignment with a leading global brand. Nvidia has since proceeded with its own major acquisition of Hugging Face for nearly $13 billion.

Anthropic's decision to withdraw was also influenced by its upcoming initial public offering (IPO) in the coming months, where it aims to raise substantial capital. Proceeding with such a costly and complex acquisition prior to the IPO presented a significant financial risk. While speculation about the involvement of Qatar's sovereign wealth fund, a major Anthropic shareholder, existed, technological and business doubts are considered the primary reasons for the deal's demise.

Although the full acquisition is off the table, the companies may explore alternative collaborations. Anthropic could potentially make a smaller investment in Decart or become a customer utilizing its optimization software to lower computing costs for its Claude models. Decart, which has previously raised $450 million from investors like Sequoia Capital and Benchmark, must now prove its viability in a competitive market. The cancellation is a blow to the Israeli tech industry, which had hoped the deal would lead to Anthropic establishing its first development center in Tel Aviv, bolstering Israel's standing in the AI sector.