Anysphere, maker of AI code editor Cursor, is in talks with investors for a funding round that could value the company at US$18 billion to US$20 billion.

These discussions follow Anysphere’s recent US$900 million funding round earlier this month, which valued the startup at US$9.9 billion.

That round was led by Thrive Capital, with participation from Andreessen Horowitz, Accel, and DST Global.

The company has not confirmed if it will seek additional funding, stating it does not require immediate cash.

Launched in 2023, Anysphere has seen rapid growth, with Cursor generating over US$500 million in annualized revenue.

Cursor is used by OpenAI, Spotify, Instacart, and others to improve coding productivity through real-time code suggestions.

Despite its growth, Anysphere faces competition from GitHub Copilot, Amazon CodeWhisperer, and Windsurf, which OpenAI may acquire for US$3 billion.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ AI code tool startups experiencing unprecedented valuation growth amid market boom

Anysphere’s potential $18-20 billion valuation represents an extraordinary growth trajectory that aligns with broader AI code tool market expansion forecasts.

The overall AI code tools market is projected to grow from $4.3 billion in 2023 to $12.6 billion by 2028 at a 24.0% CAGR, with some estimates suggesting it could reach $30.1 billion by 2032 1.

This valuation surge reflects a broader pattern where AI startups command premium valuations, typically 60% higher at Series B funding stages compared to non-AI counterparts 2.

Anysphere’s rapid ascent parallels the increasing share of AI startups achieving unicorn status, which has grown from just 5% in 2015 to approximately 35% in 2024 3.

The generative AI segment has been particularly attractive to investors, accounting for nearly 50% of total AI funding in 2023, a dramatic increase from just 8% in 2022 4.

While Anysphere’s $500 million annualized revenue appears impressive, investors appear to be pricing in substantial future growth potential rather than current financials, evidenced by the 40x revenue multiple implied by a $20 billion valuation.