Latest AI unicorn sees users, revenue spike 4x in only six months

Emergent, a US-based AI coding startup, has increased revenue and active users by 4x en route to a US$1.5 billion valuation, co-founder and CEO Mukund Jha tells Tech in Asia.

The valuation was announced as part of a US$130 million series C funding round led by Creaegis and co-led by MNI Ventures – Claypond Capital and Sentinel Global, which was announced today. Existing investors such as Khosla Ventures, SoftBank Vision Fund 2, Lightspeed, and Y Combinator participated in the raise, which brings Emergent’s total funding to US$230 million.

The growth in revenue and active users covers the six months since January, when the startup raised US$70 million from its previous funding round.

Emergent now has 10 million users globally, though Jha declined to say how many actively use the platform.

Emergent co-founders Madhav Jha (left) and Mukund Jha / Photo credit: Emergent

Its annualized revenue run rate (ARR) reached US$120 million in June, up from US$100 million in February, Jha says.

“We feel we are on track to get to about half a billion [in ARR] over the next 12 to 15 months,” he adds.

While the annualized figure depends on Emergent maintaining its recent sales, Jha says more of its revenue is coming from returning customers, which account for roughly 70% to 75% of the total.

In terms of its user base, Jha says most of Emergent’s revenue comes from entrepreneurs and small business owners who build software on the platform for their operations.

He adds that the business is geographically spread out: North America and Europe each account for roughly one-third of revenue, with the rest coming from other markets.

Product development and sales

Emergent plans to use its new funding to speed up product development and expand sales and marketing.

Hosting – the fees customers pay to keep their apps running on the startup’s platform – has grown from around 6% of revenue last year to 14% today. On paper, hosting can provide a steadier source of income because customers make continuous payments for their apps to stay online.

Emergent has also improved its gross margin, with Jha calling it “significantly positive.” The figure stood at around -15% when Tech in Asia interviewed Jha last year.

“It’ll probably be easy to get to 60% to 70% gross margin,” he adds. He declined to provide current percentages.

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