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.
Cursor’s Growth Amid Open-Source Competition
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.
