Cursor in talks to raise at a $10B valuation as AI coding sector booms

Cursor could raise at a $10B valuation amid booming AI coding assistant sector.

: Anysphere is negotiating to secure funding at an approximately $10 billion valuation for its AI-powered coding assistant, Cursor. The anticipated fundraising would arrive three months subsequent to Anysphere's last $100 million funding at a pre-money valuation of $2.5 billion. Thrive Capital is anticipated to lead this new round, which remarkably values Anysphere at 66 times its current annualized recurring revenue of $150 million. Simultaneously, Codeium is raising funds with a near $3 billion valuation, being led by Kleiner Perkins, reflecting the surging investor enthusiasm for AI coding tools.

In the rapidly evolving landscape of AI-driven coding solutions, Anysphere is negotiating to raise capital at a staggering $10 billion valuation for its AI coding assistant, Cursor. This comes hot on the heels of its recent $100 million raise at a $2.5 billion pre-money valuation, marking a significant uptick within a span of just three months. Bloomberg's report highlights a potential seal of approval from investors on the transformative power and potential of AI within the coding space. Thrive Capital, a returning investor, is expected to spearhead this significant fundraising effort. Witnessing an apparent rise of Cursor in the AI coding realm, no confirmations have yet been issued by either Anysphere or Thrive Capital, as they remain unreceptive to immediate comments.

Anysphere's previous valuation, reported by The New York Times, was 25 times its $100 million Annualized Recurring Revenue (ARR). The latest developments suggest its ARR has possibly reached $150 million, implying a new valuation multiplier of 66 times if the deal goes through. This growth trajectory underscores an insatiable investor appetite for firms capable of demonstrating rapid revenue doubling in the AI domain. As AI technologies continue to reshape sectors beyond tech, the pronounced ascendancy in ARR signals a market saturation for AI-powered tools within coding.

Akin to Anysphere, the startup Codeium is also making strides within the AI coding sector. Known for its AI coding tool Windsurf, Codeium is currently seeking funds at a valuation close to $3 billion. Kamaron Leach in his TechCrunch article revealed that the company, led by Kleiner Perkins, is valued at around 70 times its ARR of approximately $40 million. This trend of high-multiple investments mirrors the broader industry movement as investors gravitate towards AI-enhanced coding solutions.

Promptly adapting to AI, investors are channeling funds not just to existing players but to budding entrants like Poolside, hinting at an explosive growth of AI utilities in development tools across various industries such as sales, law, and healthcare. Information from TechCrunch and The Information indicate Poolside's endeavors to craft its own Large Language Model (LLM), which has prompted interest from several venture capitalists of late. Despite the buzz, Poolside has yet to formally communicate its financing intentions.

This burgeoning interest in the AI domain, largely within the programming tools sect, highlights a pivotal shift. Investors place significant value on AI technologies at an extraordinarily early stage, supporting AI startups' ambitions to disrupt traditional coding practices. As observed with Anysphere and its peers, this tendency to offer substantive valuations reflects the expected transformative nature of AI coding assistants, suggesting an imminent, broader adoption across industries.

Sources: Bloomberg, TechCrunch, The New York Times, The Information.

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