The AI Coding Startup Favored by Tech CEOs Is Now Worth $29.3 Billion
Cursor, which was founded by four MIT graduates who are still in their mid-20s, raised $2.3 billion in its third funding round this year
- Cursor, an AI coding tool startup, raised $2.3 billion at a $29.3 billion valuation, nearly 12 times its January level.
- Google and Nvidia invested in Cursor’s latest funding round, deepening their existing partnerships.
- Cursor plans to use the new capital for technical research and to invest in its new AI model, Composer.
Cursor, a startup that makes an AI coding tool beloved by engineers, has raised $2.3 billion at a $29.3 billion valuation—nearly 12 times the value the company had in January.
Accel, which invested in Cursor’s last funding round, co-led this one with Coatue, a new investor. Existing investors such as Thrive Capital and DST Global also participated in this funding round, the company’s third this year.
Other new investors include Alphabet’s GOOGL -1.58%decrease; red down pointing triangle Google and Nvidia NVDA 0.33%increase; green up pointing triangle, which Cursor invited to the round “to deepen the partnership,” said Michael Truell, co-founder and chief executive officer of the startup, in an interview.
Google provides artificial-intelligence services and cloud computing to the startup, while Nvidia is an enterprise customer. Nvidia CEO Jensen Huang has given high praise to the startup in recent public appearances.
It has rebuffed acquisition interest from a number of major AI companies, according to people familiar with the matter.
Co-founded by four Massachusetts Institute of Technology graduates who are all still in their mid-20s, the company makes an AI tool that learns a developer’s coding style to help autocomplete, edit and review lines of code, according to software engineers. The tool, which launched in 2023, has earned a cult following from professional engineers and top CEOs, from Nvidia’s Huang to Stripe’s Patrick Collison.
“One of my first interactions with Michael, he talked about being low-hype and high-pragmatism,” said Miles Grimshaw, a partner at Thrive Capital. “Which is to say, they want to focus on the work and not the hoopla.”
Cursor’s tool allows users to toggle between different AI models, from OpenAI to Anthropic to Google and more. Developers love its usability and flexibility, but the startup pays the big AI-model companies substantial fees for access to their models. The competitive pressure ratcheted up this year when OpenAI and Anthropic launched their own AI-coding tools.
In late October, the company launched its new AI model, called Composer. The model could eventually become an opportunity for the company to reduce its dependency on third-party models and keep more of its revenue, but for now the main goal is simply to continue adding more users to its product, investors said.
As the biggest AI-model builders continue to grow—in size and in product development—investors and founders are looking to Cursor to see if a startup can successfully build an independent company on top of the models from OpenAI, Anthropic and others.
“We’re excited to be one of the first examples of a large company built on their platforms,” said Truell. He added that the relationships between Cursor and the AI-model companies is simpatico. “All of the AI labs are important partners to us,” he said.
The company intends to use the new capital for technical research and to invest in Composer. “It does take significant resources, both specialized talent and also GPUs, to do something at Composer’s scale,” said Truell, referring to graphics processing units. “This funding lets us do it in a big way.”