Cursor roars to $29.3B valuation, nearly triples in five months Hannah Collymore | usagoldmines.com

AI startup Cursor has risen to a $29.3 billion valuation following a $2.3 billion funding round led by Coatue Management. The round also included a mix of existing investors, such as Accel, and new backers, including Nvidia and Alphabet’s Google. 

Cursor’s surge in valuation comes after it raised $900 million in June at a $9.9 billion valuation. The June round saw participation from Thrive Capital, Andreessen Horowitz, and Accel. 

Per Reuters, the company shared that it has now surpassed $1 billion in annualized revenue, with sales-led revenue growing 100-fold since the beginning of 2025.

Cursor’s code-generation boom drives investor interest

Cursor builds software that autonomously generates and completes code, allowing developers to write applications faster and with fewer errors, and the technology has been touted to replace traditional software development. The company’s tools are part of a growing segment of AI known as code generation.

Investors see vast commercial potential in this space, as enterprises seek to automate routine programming tasks and accelerate the development of digital products, making tools like Cursor attractive.

The new funding round positions Cursor as one of the highest-valued startups in the code-generation market, far outpacing peers such as Replit, which reached a $3 billion valuation in September after raising $250 million. It now joins a short list of AI companies with over $10 billion valuation. 

Rising valuations meet rising concerns

The near-tripling of Cursor’s valuation in such a short period comes amid an increase in venture funding for AI companies. According to reports, global venture capital investment rose 38% year-on-year in the third quarter to $97 billion, with about half of that total flowing into AI-related businesses, according to data from Crunchbase.

Investors have been particularly drawn to companies that can demonstrate tangible revenue growth, something Cursor seems to be doing well. By crossing the $1 billion annualized revenue threshold, it joins a small group of AI startups claiming to have achieved substantial commercial traction at scale.

However, the frenetic pace of fundraising and valuations of AI companies has led to debates about its long-term market, with some experts, investors, and industry heavyweights like Jeff Bezos predicting that the fate that met the dot-com boom may befall it as well. 

However, Bezos reportedly stated that irrespective of what happens later in the sector, it’s certain that there will be winners as well as losers, and the society will still benefit from the inventions that will come out of the ‘AI bubble.’  

Investors are also spreading their bets to ensure that they find themselves on the winning sides as much as possible. 

Concerns about overheating went up this week after Japan’s SoftBank Group sold its $5.8 billion stake in Nvidia, a move some analysts interpreted as a signal that even the sector’s most bullish investors are beginning to take profits.

A defining moment for AI development

Founded by a team of former MIT engineers under the umbrella of parent company Anysphere, Cursor has quickly become one of Silicon Valley’s breakout AI success stories. 

OpenAI was in talks with Cursor’s parent company to acquire the platform, but the deal fell through. The makers of ChatGPT also tried to acquire Windsurf, another code-generation startup, but also left the deal to launch its own platform called Codex. Windsurf itself was later acquired by AI startup Cognition. Anthropic’s Claude Code is also in the picture, and it has reportedly made about $500 million since it debuted this year.

So, despite its rapid growth, Cursor faces formidable challenges. Apart from OpenAI and Anthropic, tech giants like Microsoft, Google, and Amazon are heavily investing in similar AI-assisted development tools.

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This articles is written by : Nermeen Nabil Khear Abdelmalak

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