Anysphere Secures $105 Million in Funding, Valuation Soars to $2.5 Billion

Anysphere, a maker of AI coding software, raises $105 million

The nearly 3-year-old startup Anysphere is now valued at $2.5 billion following a new funding round led by Thrive Capital, which previously backed OpenAI and Databricks, and Andreessen Horowitz, that is another existing backer. The surge in AI investments has driven up startup valuations, with OpenAI valued at over $150 billion and Databricks at $62 billion.Anysphere, whose Cursor software uses artificial intelligence to help programmers code on the fly, planned to announce Tuesday that it has raised $105 million at a big jump in valuation. The new round, which values the nearly 3-year-old startup at $2.5 billion, was led by Thrive Capital, which spearheaded huge recent investments in OpenAI and data company Databricks, and Andreessen Horowitz, the giant venture capital firm that is another existing backer. The funding is the latest sign of fierce competition among investors to gain exposure to AI startups. AI deals accounted for more than 35% of the $366 billion worth of venture capital deals last year, according to research firm PitchBook. Besides Thrive and Andreessen Horowitz, the round included another major venture capital firm, Benchmark. A wave of AI investments has pushed up valuations of startups, with OpenAI worth more than $150 billion and Databricks worth $62 billion. That has generated concern about whether the fervor is inflating a speculative bubble. In the case of Anysphere, its new valuation is up sixfold from what it fetched in its last fundraising round -- in May. Even so, "we turned down higher offers," said Michael Truell, the company's cofounder and chief executive officer (CEO). The interest stems from Anysphere's Cursor product. The software, which operates off proprietary models and large language models from OpenAI and Anthropic, helps autocomplete code for programmers. On Monday, the company unveiled a new version of a feature that can predict a user's next line of code -- with Truell saying that in some cases it can fill in the next 10 minutes' worth of programming. Its something that many tech moguls have high hopes for: Mark Zuckerberg, CEO of Meta, said recently on "The Joe Rogan Experience" that his company will begin automating some code-writing. Anysphere has also quietly rolled out so-called agentic features for Cursor that can independently complete some tasks for users. "Source code is starting to blend into the background," Truell said. Other companies, including Codeium, Poolside and Sourcegraph, offer competing products, and the Copilot feature of Microsoft's GitHub also focuses on automating coding. In November, Anysphere bought another competitor, Supermaven. Mile Grimshaw, a partner at Thrive who helped lead the investment, said in an interview that developers from all of his firm's portfolio companies use Cursor, up from a handful a year ago. That, Grimshaw said, was part of what made him receptive to Truell's argument in the fall that Anysphere should raise money again, given the company's growth. Truell added that he had wanted to show the public how stable Anysphere's business was and that the new money was not specifically earmarked for any particular purpose. "We've never seen a company achieve such broad and rapid adoption," Martin Casado, a partner at Andreessen Horowitz who sits on Anysphere's board, said in a statement. For some skeptics, the investor AI fervor -- especially how quickly it has pushed up funding rounds -- has increased the possibility of companies being overvalued, as in previous technology booms. But Truell said that Anysphere had sought to keep a lid on costs, including spending on computing resources. He also argued that his company's valuation was within historical norms. (It's about 25 times Anysphere's $100 million in annual recurring revenue, in line with other AI startups.) While acknowledging concerns about valuations, Grimshaw argued that some of these companies were building transformational products, likening them to Google, Instagram and Amazon. "I'm sure there will be some companies that didn't live up to their hopes and dreams," he said. But the advances and adoption of Cursor suggested that Anysphere didn't belong in that category. "The opportunity is so big," Grimshaw added.

Anysphere Raises $105M in Series B

According to a report by New York Times, Anysphere, the start-up behind Cursor, is reportedly raising $105 million in a funding round, catapulting its valuation to $2.5 billion. Thrive Capital and Andreessen Horowitz led the round, with Benchmark also participating. "Thrilled to announce that a16z is co-leading the Series B of Cursor AI. We couldn't be more excited to continue working with the Cursor team as they take the world of coding by storm," said Sarah Wang, General Partner at a16z growth fund. The funding will enable Anysphere to enhance its offerings in a competitive market led by tools like GitHub's Copilot, Codeium, and Sourcegraph. AI stands out as a bright spot in an otherwise subdued VC landscape with low exit activity, offering the potential for massive industry disruption and productivity gains. Both xAI and OpenAI raised billions, showcasing strong investor confidence and intense competition. xAI recently completed a $6 billion Series C last month, while OpenAI secured $6.6 billion earlier last year. Founded by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger of Anysphere and MIT, Cursor aims to write the world's software. Its flagship product, Cursor, has become immensely popular due to its features and the endorsement of AI scientist Andrej Karpathy. Last month, Cursor introduced an update enabling partial coding automation. Its AI agents can navigate contexts, handle errors, and execute terminal commands autonomously. Anysphere raised $60 million in Series A funding, led by Andreessen Horowitz, including funding from OpenAI's Jeff Dean, John Schulman, Nat Friedman, and Noam Brown. The company is valued at $400 million overall. In a demo on X, Wes Winder showed Cursor creating a complete stopwatch app (HTML, CSS, JavaScript) and launching a web server -- all from one text prompt. On the open-source front, Y Combinator has a strong track record of supporting such startups, particularly open-source AI editors. Y Combinator's Gary Tan has championed a bottoms-up approach to make AGI more accessible to consumers. YC-backed open-source AI editors like Void, Type, Melty, Continue, and Pear are emerging as direct competitors to established players such as Cursor AI and Zed AI.