Anthropic’s Department of War lawsuit is even higher-stakes amid the AI boom

This is the sort of thing that has happened, but is rare—and a matter of last resort. For more than a week, the Pentagon and Anthropic, valued at $380 billion, have been wrapped in a very public conflict over how the Trump Administration can (and can’t) use AI. The result: Secretary of War Pete Hegseth last week designated the company a “supply chain risk.”

In its lawsuit, filed yesterday in the U.S. District Court for the Northern District of California, Anthropic says the Pentagon’s actions are “unprecedented and unlawful.” It also claims that, for Anthropic, “hundreds of millions of dollars” of government contracts are either canceled or in jeopardy. This is the comment that Anthropic offered to my colleague Beatrice Nolan: “Seeking judicial review does not change our longstanding commitment to harnessing AI to protect our national security, but this is a necessary step to protect our business, our customers, and our partners.”

In short, “we’re not letting this go.” And it’s worth saying: There’s absolutely precedent for a large, emerging tech giant suing the government, albeit in different circumstances. Consider Palantir: In 2016, the company sued the U.S. Army over its intelligence software procurement process, arguing it wasn’t getting a fair opportunity to compete—and a federal judge ultimately sided with Palantir. Something similar happened in 2014, when SpaceX sued the U.S. Air Force. SpaceX demanded that its rockets be allowed to compete for key launches, and the two sides eventually settled. (SpaceX won many launch contracts in the years that followed.) And even incumbents aren’t immune to fights like this: There was also the DoD’s $10 billion JEDI cloud contract with Microsoft, which led to separate lawsuits from Amazon and Oracle (an imbroglio the government only resolved by annulling the contract in 2021). 

So, this does happen. That said, this conflict between the Pentagon and Anthropic isn’t only contentious for its content (including ethical questions around the extent to which AI can be used for autonomous killing) but for the sheer financial stakes. In February, the company closed its $30 billion Series G, building on the billions that have already been poured into the one true competitor to OpenAI. As Fortune’s Jessica Mathews reported last week, investors have mostly held the line with Anthropic CEO Dario Amodei for now—but that doesn’t mean this is going to be easy moving forward. 

If anything, it will only get more public, too.

A call for your questions… I’ll be interviewing Harvey CEO Winston Weinberg for the next episode of the Term Sheet Podcast, and I want to ask him your questions! Have questions for Winston? Send ‘em to alexandra.garfinkle@fortune.com.

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com

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VENTURE CAPITAL

– KAST, a New York City‑based platform designed for saving and spending stablecoins, raised $80 million in Series A funding. QED Investors and Left Lane Capital led the round and were joined by Peak XV Partners, HSG, and DST Global Partners.

– Isembard, a London, U.K.-based manufacturer of high-precision products for the aerospace, defense, energy, and robotics industries, raised $50 million in funding from Union Square Ventures, Tamarack Global, IQ Capital, and angel investors.

– Avvoka, a London, U.K.-based developer of AI-powered drafting technology for law firms, raised £14 million ($18.7 million) in funding. Valhalla Ventures led the round.

– Axiomatic AI, a Cambridge, Mass.-based developer of AI tools for science and engineering, raised $18 million in seed funding. Engine Ventures led the round and was joined by Kleiner Perkins, Big Sur Ventures, G Vision Capital, Propagator Ventures, and Liquid 2.

– Escape, a San Francisco-based developer of agentic AI technology designed to discover and fix security vulnerabilities in engineering workflows, raised $18 million in Series A funding. Balderton led the round and was joined by Uncorrelated Ventures and existing investors IRIS and Y Combinator.

– Levitate, a Raleigh, N.C.-based marketing platform for managing professional relationships, raised $16 million in funding. Harbert Growth Partners led the round and was joined by Bull City Venture Partners and Northwestern Mutual Future Ventures.

– Augur, a London, U.K.-based AI platform designed to protect critical national infrastructure, raised $15 million in seed funding. Plural led the round and was joined by First Kind, SNR, Flix, and Tiny VC.

– Shiva, a São Paulo, Brazil-based community platform designed for entrepreneurs using AI to build new products, raised $10 million in pre-seed funding. Monashees led the round and was joined by Endeavor Catalyst. 

– Racquet 360, a Miami, Fla.-based padel and racket sports company, raised $9 million in funding from Sunrise Padel Capital, Profluence Capital, and Taktika Equity.

– Coral, a New York City-based rebates and financing platform for energy-efficient HVAC and electrical upgrades, raised $7.5 million in seed funding. ResilienceVC led the round and was joined by Twelve Below, Floating Point, Accion Ventures, Blackhorn Ventures, Remarkable Ventures, and New Climate Ventures.

– Utexo, a Dubai, U.A.E.-based platform settling USDT transactions on the bitcoin network , raised $7.5 million in seed funding. Tether, Big Brain Holdings, and Portal Ventures led the round and were joined by Franklin Templeton, Maven11 Capital, Fulgur Ventures, Alchemy VC, and others.

– Yourco, a Chicago, Ill.-based frontline employee communication and intelligence company, raised $6 million in Series A funding. High Alpha led the round. 

– Anchr, a New York City-based AI-powered operating system for food distributors, raised $5.8 million in seed funding from a16z Speedrun, Anterra Capital, Offline Ventures, Long Journey Ventures, and others.

– Crafting, a San Francisco-based developer of AI agents for software development, raised $5.5 million in seed funding. Mischief led the round and was joined by WndrCo and angel investors.

– Cytotrait, a Manchester, U.K.-based gene editing company for food and agriculture, raised £3 million ($4 million) in seed funding. Northern Gritstone led the round and was joined by the UK Innovation & Science Seed Fund and Northern Universities Ventures Fund. 

– Intelligent Legal Solutions, a Chicago, Ill.‑based legal technology company designed to help private fund lawyers automate certain workflows, raised $3 million in seed funding. Chicago Ventures led the round.

– Orca Fraud, a Cape Town, South Africa-based fraud intelligence platform, raised $2.4 million in funding. Norrsken22 led the round and was joined by OneDayYes, Enza Capital, and CV VC Africa.

PRIVATE EQUITY

– ISPN, backed by Align Capital Partners, acquired ZCorum, an Alpharetta, Ga.-based managed services and diagnostics company for broadband service providers. Financial terms were not disclosed.

– Midland Industries, a portfolio company of Gemspring Capital, acquired Industrial Specialties Manufacturing, an Englewood, Colo.-based flow control parts supplier. Financial terms were not disclosed.

– Siris agreed to acquire a majority stake in TAKKION, a Centennial, Colo.-based integrated services provider for the renewable energy industry. Financial terms were not disclosed.

EXITS

– Monomoy Capital Partners agreed to acquire Jiffy Lube International, a Houston, Texas-based quick lube and automotive service franchisor, from Shell for approximately $1.3 billion.

– Agilent Technologies agreed to acquire Biocare Medical, a Pacheco, Calif.-based developer of automated immunohistochemistry instrumentation, from an investor group led by Excellere Partners and GHO Capital Partners for $950 million. 

– Henkel agreed to acquire DeMert Brands, the Tampa, Fla.-based parent company of the Not Your Mother’s hair care brand, from Main Post Partners. Financial terms were not disclosed.