There is no shortage of AI-powered coding assistance startups. These include Augment, Codeium, Magic, and Poolside.
However, Cursor has become one of the most popular. Its developer, Anysphere, saw its revenue rise from $4 million in annual recurring revenue (ARR) in April to $4 million a month as of last month, according to a person with direct knowledge of the company's finances. Another person said the company has seen faster user adoption and growth compared to other coding assistant providers.
VCs are flocking to such rapid growth. AnySphere reportedly received unsolicited offers from Benchmark, Index Ventures, and former investors Andreessen Horowitz and Thrive that valued the company at $2.5 billion.
Index Ventures declined to comment. Anysphere, Benchmark, Andreessen Horowitz, and Thrive did not respond to requests for comment.
Interest in the company has grown rapidly, with unsolicited offers starting last week at a valuation of $1.5 billion, but has already risen to $2.5 billion, people with direct knowledge of the company said. Sources also told the magazine that investors want to price the company at $2.5 billion.
This compares to Anysphere's $400 million valuation just four months ago, when it raised $60 million in Series A led by Andreessen Horowitz and Thrive. Stripe co-founder Patrick Collison also participated in the round.
The company was co-founded by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger in 2022 while attending MIT. Last year, Anysphere graduated from OpenAI's accelerator program, becoming its most notable graduate. The company then raised an $8 million seed round led by OpenAI's Startup Fund, with participation from former GitHub CEO Nat Friedman and Dropbox co-founder Arash Ferdowsi.
Most engineers already use coding assistants like Cursor, and some VCs hope these tools will soon mean startups will hire fewer software developers.