Startup Cursor Rides AI Coding Vibes to $29B Valuation

It would appear to be the chosen one. A fast-growing coding firm based on the premise of artificial intelligence riding shotgun with Silicon Valley engineers is now one of the region’s most valuable startups.

San Francisco-based Cursor said Thursday that it raised $2.3 billion at a valuation of $29.3 billion, tripling its value from a previous raise in June.

It’s a Vibe

Founded by four MIT graduates who are still barely old enough to avoid the under-25 fee at a car rental agency, Cursor’s chief product is a code editor designed around AI. It allows engineers to toggle between generative AI chatbots (including OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini) and tell them in plain English what they want built. The AI then writes code, improves it with revisions and repairs bugs as the engineer reviews and requests changes to the lightning-fast work.

In tech circles, directing AI this way is nicknamed “vibe coding,” a term that Collins English Dictionary picked as its 2025 word of the year. There’s limited data on adoption, but evidence suggests its popularity is rapidly accelerating. Private markets data provider Sacra estimates the company reached $200 million in annual recurring revenue in March, up from $100 million at the end of 2024. And a name check from Nvidia CEO Jensen Huang, who last month called Cursor “his favorite enterprise AI service,” was the promotional equivalent in 2025 tech to Michael Jordan lacing up Nike sneakers for the first time in 1984. And like Nike back then, Cursor plans to use the money to escape the shadow of giants:

• The new funding will be allocated toward research and the further development of Composer, Cursor’s own AI model, which was released last month. While having a bespoke model introduces new infrastructure costs like GPUs, it could also offer Cursor an offramp from the hefty fees it has to pay ChatGPT, Google and other AI giants to use theirs.
• Nvidia, Google and Andreessen Horowitz were among the participants in the company’s latest funding round. Despite these high-powered investors, The Wall Street Journal reported that Cursor has rejected approaches from Big Tech firms interested in an acquisition.

Up to the Job: Cursor announced its own acquisition Thursday, that of tech recruiting company Growth by Design. The small boutique, which has worked with hundreds of tech firms and notably helped OpenAI staff up with top engineers, will end its relationships with other clients and become Cursor’s in-house recruitment team. The move signals that Cursor, which has grown its ranks nearly sixfold to 300 in the past six months, likely plans to challenge megacap firms head-on for talent.