AI Coding Assistants Magic and Codeium Secure Massive Funding, Reshaping the Developer Tools Landscape

AI coding assistant startup Magic closes $320M round as rival Codeium nabs $150M - SiliconANGLE

AI coding assistant startup Magic closes $320M round as rival Codeium nabs $150M Magic AI Inc. and Codeium, two startups using artificial intelligence to make developers more productive, have both closed nine-figure funding rounds to support their growth efforts. Magic disclosed today that it recently raised $320 million from a group of prominent investors. Codeium, officially Exafunction Inc., announced in conjunction that it has closed a $150 million round at a $1.25 billion valuation. Both companies are using AI to automate repetitive tasks for developers, but they're taking different approaches to doing so. San Francisco-based Magic is developing foundation models optimized specifically for programming tasks. On occasion of today's funding announcement, the company detailed a new internally-developed AI dubbed LTM-2-mini. Magic says that it can process prompts containing up to 100 million tokens, which corresponds to about 10 million lines of code. The ability to ingest large amounts of code is useful for many programming automation use cases. An AI built to find software vulnerabilities, for example, must scan application files containing up to thousands of lines of code to find risky bugs. A search tool for developers may have to sift through multiple documentation repositories to find the explanation requested by a user. Magic put its LTM-2-mini model to the test by having it complete a number of coding assignments. In one experiment, the AI developed a tool that measures the strength of user passwords. In another internal test, LTM-2-mini created a virtual calculator. The $320 million investment that Magic announced today could help the company finance the development of additional AI models. The deal included the participation of former Google LLC Chief Executive Officer Eric Schmidt, Atlassian Corp., Jane Street and Sequoia. They were joined by several returning investors including CapitalG, Google parent Alphabet Inc.'s growth fund. Magic detailed the funding round alongside a new technical partnership with the search giant. The collaboration will give the startup access to two AI supercomputers hosted in Google Cloud. The first system, which the companies have named Magic-G4, will be powered by Nvidia Corp.'s H100 graphics processing units. The other supercomputer is known as Magic-G5 and will be equipped with up to tens of thousands of the chipmaker's latest Blackwell B200 chips. The latter processor can reportedly perform inference several times faster than the H100. Google detailed in a blog post that the two supercomputers will provide up to 160 exaflops of performance. One exaflop equals a billion billion computations per second. The world's fastest AI supercomputer, a system called Aurora that is operated by the U.S. Energy Department, achieved 10.6 exaflops of performance in a May benchmark test. Codeium, the other startup that announced a funding milestone today, has also equipped its programming assistant with the ability to process large amounts of code. According to the company, the tool can ingest an application's entire code repository. When a developer asks a question about a given program component, the AI can use its knowledge about the program's other modules to generate a more comprehensive answer. Codeium sells its software in the form of an extension for popular code editing applications. Once activated, the extension adds a chatbot to the interface of the editor in which it's installed. Developers can ask the chatbot to explain how a given code snippet works, fix any bugs it may contain and rewrite it to improve hardware efficiency . Codeium also provides a number of other AI features. One capability, Smart Paste, allows developers to copy a snippet of code and have it automatically translated into a new language before they paste it to a new location. Another feature called Forge can review changes to a code file for errors before the update is rolled out to production.

AI Coding Is Ultra Hot, With Magic And Codeium Revealing Big Rounds This Week

The intersection of AI and coding is one of the hottest areas for venture funding of late. But even in a heated investment environment, this week was exceptional. Two companies, Magic and Codeium, confirmed fundraises of $320 million and $150 million, respectively. The two are among a larger cohort of recently funded companies aiming to add efficiency and alleviate pain points for the code development process with AI-enabled tools. San Francisco-based Magic, which develops AI models to write software, said the new financing included backing from new investors Eric Schmidt, Jane Street Capital, Sequoia Capital and Atlassian Ventures. To date, the 2-year-old startup has raised over $465 million, according to Crunchbase data. Codeium, which is based in San Jose, California, and is working on an AI coding assistant, said funding for its just-closed Series C came from lead investor General Catalyst, alongside Kleiner Perkins and Greenoaks. The 3-year-old company says it is working on tools to improve code quality while also reducing cost and development time. The financings came amid a busy period for funding rounds around artificial intelligence and coding automation. Using Crunchbase data, we put together a list of nine companies innovating in this space that have raised sizable rounds in roughly the past year. Notably, many of these companies are moving quickly from one round to the next. Magic raised a prior big round in February. Codeium's Series C came just seven months after its Series B. And Silicon Valley-based Augment, developer of an AI coding aid, raised an April Series B just four months after its Series A. It's not hard to understand the appeal of what these startups are pitching. Code development has historically been an expensive, time-consuming and labor-intensive endeavor, faced with perennial talent shortages. If new AI tools can help with any of those issues, they're sure to find a welcome audience among companies of all sizes.

Magic Raises $320 Million to Develop AI Coworker for Coding

The investment brings the total amount the company has raised to $465 million, according to the post. Together with Schmidt, other new investors in Magic include Jane Street, Sequoia and Atlassian, per the post. "We believe the most promising path to safe [artificial general intelligence (AGI)] is to automate AI research and code generation to improve models and solve alignment more reliably than humans can alone," Magic said on its website. Magic also said in its blog post that it will build its next two supercomputers on Google Cloud. "We are excited to partner with Google and Nvidia to build our next-gen AI supercomputer on Google Cloud," Magic CEO and co-founder Eric Steinberger said in the post. "Nvidia's GB200 NLV72 system will greatly improve inference and training efficiency for our models, and Google Cloud offers us the fastest timeline to scale, and a rich ecosystem of cloud services." In February 2023, Magic raised $23 million in a Series A funding round, saying in a blog post that the funding would "accelerate our journey to build a true AI colleague for software engineering." "While today's code completion tools are already proving to be immensely useful, we can't wait to see what people build with magic," the company said in the Feb. 6, 2023, post. It was reported Aug. 23 that generative AI has quickly proven its value in powering coding assistants. AI-powered assistants offer developers a powerful new toolkit to brainstorm ideas, write and refine code, and fix bugs, PYMNTS reported in May.

Cursor Rival Codeium Raises $150 Mn, Becomes Unicorn with $1.25 Bn Valuation

Magic, another rival, closed a round of $320 million, including participation from Eric Schmidt, Atlassian, Jane Street, and Sequoia. While the debate around GitHub Copilot and Cursor AI is increasing, Codeium, an AI-powered code acceleration platform, announced that it has raised $150 million in a Series C funding round, propelling its valuation to $1.25 billion, becoming a unicorn. The round was led by General Catalyst, with continued participation from existing investors Kleiner Perkins and Greenoaks. This funding milestone marks Codeium's ascent to Unicorn status in less than two years since its inception. "The future of coding isn't just about writing lines of code faster -- it's about enabling developers to think bigger, push boundaries, and achieve the extraordinary," said Varun Mohan, CEO of Codeium. "This fresh funding means we're more equipped to help developers turn those 'what ifs' into 'what's next,' having the freedom to innovate without limits and turn challenges into opportunities for growth." Codeium's platform leverages proprietary code-based LLMs to streamline software development and enhance developer productivity. With the newly secured funds, the company plans to accelerate the development of new features, expand its product offerings, and increase its workforce. The focus will also be on strengthening partnerships to maximise AI strategies and broaden its market impact. Quentin Clark, Managing Director of General Catalyst, emphasised Codeium's rapid adoption in real-world production environments, stating, "Codeium isn't just an idea -- it's a fully scaling business with widespread enterprise adoption. Their genAI tools for software development are proving their worth in real production environments, where reliability is key." The funding announcement follows a period of significant growth for Codeium. The company has expanded its team to 80 professionals and grown its user base to over 700,000 active developers. In 2024, the enterprise product achieved eight figures in annual recurring revenue, with ARR increasing by over 500%. Additionally, Codeium now processes more than 100 billion tokens daily and has been integrated into production workflows at major companies such as Zillow, Dell, and Anduril. Codeium has proactively removed "non-permissively" licensed code, such as copyrighted code, from the datasets used to train its AI models. This step addresses a common issue with some code-generating tools that, when trained on restrictively licensed or copyrighted code, can inadvertently reproduce that code, leading to potential legal risks for developers. According to Mohan, Codeium avoids this problem through its careful preparation and filtering of training data. Recent technological advancements from Codeium include the launch of Cortex, an AI-powered reasoning engine for managing complex coding tasks, and Forge, an AI-assisted tool that enhances code review efficiency and culture. These innovations are part of Codeium's mission to transform software development by making coding faster, smarter, and more intuitive. In similar news, another AI coding assistant platform, Magic, closed a round of $320 million, including participation from Eric Schmidt, Atlassian, Jane Street, and Sequoia.