AI Startup Decart Deal With Anthropic Collapses Amid Valuation and Relocation Disputes

A multi-billion dollar deal for the acquisition of Israeli AI startup Decart by Anthropic has been called off after weeks of intense negotiations. The proposed $6 billion deal, which would have significantly boosted Israel's standing in the AI sector, fell apart for reasons that remain unclear, though potential factors include Anthropic's demand to relocate Decart's core operations and talent to San Francisco, or strategic considerations ahead of Anthropic's upcoming IPO.

Decart, founded in Tel Aviv in September 2023 by brothers Dean and Oryan Leitersdorf and Moshe Shilo, specializes in real-time AI processing for video, image, and audio. The company's valuation had surged to $4 billion from $100 million in less than two years, with the founders holding a 64% stake. Prior to negotiations with Anthropic, Decart reportedly rejected a higher offer, estimated at over $7 billion, from Nvidia. Nvidia's recent $12.9 billion acquisition of Hugging Face, a major open-source AI model repository, may also signal a shift in its acquisition strategy.

According to foreign media reports, Anthropic initiated the deal's termination late in the negotiation process, after the completion of due diligence and signing of a non-binding Letter of Intent (LOI). While the exact reasons are speculative, Anthropic may have been unimpressed with Decart's technology, or believed it could develop similar capabilities internally or acquire other companies at a lower cost. Alternatively, Decart's business, which has undergone several shifts, might have been deemed too small for Anthropic's scale.

Sources close to Decart believe Anthropic was impressed by the technology but insisted on relocating the company's core operations and intellectual property to California. The founders reportedly refused this demand, preferring to keep Decart based in Tel Aviv. This geographical dispute is significant as major AI firms like Anthropic, OpenAI, and Google often centralize their core development in San Francisco or Silicon Valley.

Another potential reason for the deal's collapse could be related to Anthropic's impending IPO, potentially valued at $2 trillion. Acquiring Decart at $6 billion, which could double to $12 billion in Anthropic stock post-IPO, might have been seen as too large a move before going public. Concerns about potential stock value depreciation after the IPO lock-up period expires could also have influenced the decision, leading both parties to postpone the acquisition until market reception to Anthropic's IPO is clearer.

The cancellation is also viewed as a setback for Israel's AI industry, following the failure of a potential multi-billion dollar acquisition of AI21 Labs by Nuvias last year, which led to layoffs and the departure of its founder, Professor Amnon Shashua.