Vercel is raising several hundred million dollars at a valuation of around US$9 billion, according to people familiar with the matter.

The San Francisco-based company, led by Guillermo Rauch, develops cloud tools for web and AI app development.

Accel is leading the investment, and Vercel’s existing backers include IVP, 8VC, Bedrock, Geodesic Capital, and GV.

Vercel previously raised over US$500 million and was last valued at about US$3 billion in 2024.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ AI development tools command premium valuations despite high revenue multiples

Vercel’s $9 billion valuation on $200 million in annual recurring revenue represents a 45x revenue multiple, significantly above traditional software companies but consistent with AI market dynamics1.

Recent analysis shows AI companies trade at a median 29.7x revenue multiple, with specialized categories like LLM vendors commanding even higher multiples at 44.1x2. This premium reflects investor confidence in AI’s transformative potential and the recurring revenue models these platforms generate.

Vercel’s positioning as an AI-enhanced web development platform places it in a favorable position where traditional developer tools meet modern AI capabilities. The company’s revenue doubling in just over a year demonstrates the market’s appetite for AI-integrated development solutions1.

The valuation also reflects the broader trend of infrastructure companies benefiting from AI adoption, as businesses increasingly need platforms that can handle AI workloads efficiently while maintaining developer-friendly interfaces.

2️⃣ Web development undergoes fundamental shift toward AI-first workflows

Vercel’s growth coincides with significant AI adoption in web development, where a growing number of websites now use a combination of human-edited and AI-generated code3.

The transformation is accelerating rapidly—by mid-2025, 2.5% of new websites were created entirely using AI tools, while 62% of businesses have invested in AI development tools34. This represents a shift from AI as an auxiliary feature to AI as a core development methodology.

Vercel’s ability to double its revenue in just over a year aligns with this industry-wide transformation, as developers increasingly seek platforms that integrate AI capabilities into their existing workflows1.

The timing suggests companies that successfully combine traditional development infrastructure with AI-enhanced features are capturing significant value as the entire web development ecosystem restructures around AI-first approaches.