Lovable, a Swedish AI startup, is in discussions with US investors to secure at least US$100 million in funding.

This investment could value the company at US$1.5 billion or more, according to sources familiar with the situation, although talks are still in the early stages and terms may change.

Founded in 2023, Lovable develops AI-powered tools that allow users without coding expertise to create apps and websites.

The company reports over US$61 million in annual recurring revenue and serves 130,000 paying customers. Subscription prices start at US$25 for individual users and are higher for enterprise accounts, which contribute 20% of total sales.

Lovable has raised US$22.5 million from investors such as Creandum, Antler, and Adam D’Angelo, a board member of OpenAI.

CEO Anton Osika did not comment on the current funding round but said that the company is in a strong financial position.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ “Vibe coding” represents the new frontier in tech fundraising

The rise of AI coding assistants has triggered significant investment levels, with Lovable’s potential $100M raise following Anysphere’s notable $900M funding round at a $9.9B valuation 1.

This sector is attracting substantial capital, with 48% of all venture capital investments in 2024 going to AI-powered companies, marking the third consecutive quarter of growth in this segment 2.

The strong investor interest persists despite many of these startups relying on foundation models developed by larger companies, raising questions about long-term defensibility and profitability 3.

Y Combinator reports approximately 25% of its portfolio companies now use AI to write 95% of their code, signaling a fundamental shift in how software is built 4.

This represents a departure from traditional software development funding patterns, with AI coding companies achieving valuations that often exceed those of typical enterprise software startups at similar revenue stages.

2️⃣ Growth metrics for AI coding startups defy typical SaaS benchmarks

Lovable’s reported $61 million ARR achieved within roughly a year of founding represents an extraordinary growth trajectory compared to traditional software companies.