AI coding startup Cursor is seeking $2 billion at a $50 billion valuation

A new funding round could bring Cursor $2 billion at a pre-money valuation exceeding $50 billion — a figure that excludes the fresh capital itself — CNBC reported.

All three firms — Andreessen Horowitz, Nvidia $NVDA, and Thrive Capital — are returning backers of the company, and each is expected to have a role in the new round, with Andreessen Horowitz slated to serve as a co-lead, CNBC reported. According to TechCrunch, Battery Ventures — a new investor — may also join the financing, and the round is already oversubscribed, though the deal terms are not final.

The new fundraise would almost double Cursor's previous valuation. Prior to this, a $900 million raise in June preceded a November close of $2.3 billion in fresh funding, the latter pegging Cursor's post-money valuation at $29.3 billion, CNBC reported.

By year's end, the company projects its annualized revenue run rate will surpass $6 billion, TechCrunch reported — a figure that would represent at least a tripling of the $2 billion annualized run rate it hit in February, per Bloomberg.

The economics of the business have begun to shift: enterprise customers now generate positive gross margins, even as individual developer accounts remain unprofitable, TechCrunch reported. Launching an in-house Composer model in November and tapping cheaper external models have been the primary drivers of that turnaround.

Four MIT students — Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger — launched the company in 2022 under the name Anysphere, according to TechCrunch. The product they released the following year gives developers AI-assisted tools for writing and fixing code. Accel, DST Global, Coatue, and Google $GOOGL are listed among its backers in a company blog post, as cited by CNBC.

Competition in the AI coding space has intensified, with Anthropic, OpenAI, and Google all offering similar tools. Cursor did not respond to a request for comment.