One Astonishing Element in Anthropic’s Prospectus That Investors Shouldn’t Ignore

Anthropic could be the next huge company to sell shares to the public for the first time through an initial public offering (IPO). The AI research company has not set a date yet, but it has now made its prospectus public. This brings it one step closer to selling shares on the stock market.

Investors and analysts have said the company could be worth more than $1.5 trillion. That would put it in the same league as Space Exploration Technologies, better known as SpaceX. SpaceX completed the biggest stock market debut in history back in June, with a value of more than $2 trillion. To understand how big these numbers are, consider today's biggest technology companies, from Nvidia to Microsoft. They spent years trading on the stock market before their values reached $1 trillion.

You may now be wondering whether you should buy shares in this huge upcoming IPO or purchase shares once they start trading. Before making a decision, consider one surprising detail in Anthropic's prospectus. It is an important point that investors should not overlook.

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From OpenAI to Anthropic

First, let's look briefly at Anthropic's history. Dario Amodei, his sister Daniela Amodei, and a small group of researchers started the AI company five years ago. Before starting Anthropic, they had been working at rival OpenAI. Anthropic created the popular AI model Claude, and its revenue grew from almost nothing to billions of dollars in about three years.

Anthropic shared its latest financial numbers in its prospectus. The AI company said its revenue grew by more than 1,300% in the six months ending June 30, reaching more than $16 billion. In the previous year, revenue grew by 1,000% to $4.5 billion. Several things have helped drive this growth. One is the popularity of Claude Code, which has reached an annual revenue run rate of $1 billion. Another is Anthropic's success in signing up business customers. For example, more than 50% of Fortune 500 companies each bring in at least $100,000 in revenue for Anthropic over a 12-month period. According to Anthropic's prospectus, this could be just the beginning. The amount each of these companies spends on Anthropic is still less than 0.1% of its total expenses.

Anthropic's cash burn

Of course, Anthropic spends a lot on research and development to support this growth, and it has lost money year after year. In the six-month period mentioned above, its reported loss was more than $80 billion. However, $72 billion of that loss came from an accounting charge that did not involve cash leaving the company. This means its actual cash burn was a little more than $8 billion. Even so, that is still a risk.

Speaking of risk, let's look more closely at the main issue to consider before buying Anthropic shares: its corporate governance structure, or the way the company is controlled. Anthropic itself says this structure has "no direct public company precedent."

Five classes of Anthropic shares

Anthropic will have five classes of shares, including the Class A common shares offered to the public. Each of these shares gives its owner one vote. Class E shares, which are offered to employees, also give one vote per share, but only on certain matters. Classes N and T have limited voting rights, too. Here is the key point: Class F shares, which belong to the founders, carry "an aggregate number of votes that represents 50.1% of the total voting power of our outstanding shares."

How will this affect shareholders? Under Anthropic's governance structure, ordinary shareholders will have little say in some important business matters and major decisions. Instead, the founders and the Long-term Benefit Trust (LTBT) will have that power. The LTBT aims to make sure AI is used safely. This is a positive goal, and it is understandable that the trust has some control to help achieve it. However, because of this structure, people who own ordinary shares cannot truly decide on important matters, such as a possible merger or removing a company director. These decisions could have a major effect on the stock's performance.

Anthropic said in its prospectus, "Holders of our Class A common stock generally will not be able to affect the outcome of any matter submitted to a vote of our stockholders or the election of our directors, regardless of how they vote."

This means that if you invest in Anthropic, you could benefit greatly if its share price rises. But if you want to influence a particular company decision, you may not have the power to do so. During good times, this might not seem important. But when the company faces difficulties, having little say could be a serious disadvantage for shareholders.

Investing in Anthropic may be the right choice for some people. But before rushing to buy shares in this major AI company, it is important to understand this issue and be comfortable with it.