Cursor Locks in $2.3B With Huge VC Support  ## Metadata - Author: [[Hard Fork AI]] - Full Title: Cursor Locks in $2.3B With Huge VC Support - Category: #podcasts - URL: https://share.snipd.com/episode/2927b743-b759-4dc5-a6cb-5c47648d673a ## Document Notes ## Highlights - **Rapid Mega-Raise And Valuation Surge** - Cursor raised $2.3 billion five months after a $900M round, signaling massive investor confidence. - Its new valuation jumped to $29.3 billion, more than doubling the prior valuation. Transcript: Jaeden Schafer Today on the podcast, we are talking about Cursor, which is a coding assistant, and it has just completed an absolutely astronomical amount of money raised. $2.3 billion. What's crazy is this is coming five months after its previous round. It just continues to, I mean, just absolutely absorb venture capital. Its valuation continues to rise. They've actually just hit a $29.3 billion valuation with this new round of funding that they've done, which was reported by the Wall Street Journal. And what's insane is this actually more than doubles the company's previous valuation, which was $9.9 billion. ([Time 0:00:02](https://share.snipd.com/snip/50761d51-24bd-4a73-9f3c-b9f549a0d4c4)) - **Strategic Investors Back Cursor** - The round was co-led by existing investor Acel and new lead Coat, with strategic checks from NVIDIA and Google. - NVIDIA's participation aligns with its interest in growing GPU-driven AI workloads. Transcript: Jaeden Schafer There's two leads on it. Acel was one of them, who is an existing investor. They put money in. And then there was Coat, which is new on the cap table. They have some strategic investors, including NVIDIA, of course, and Google, who also joined in the round. No shocker here. NVIDIA is basically handing out money to the top AI use cases as they know the money is going to come straight back to them as more compute will be needed. So Joshua Kushner, who's from Thrive Capital, led the company's two prior rounds that they did. And he was also participating in this round as well. ([Time 0:00:56](https://share.snipd.com/snip/12911a78-c89c-4e42-9618-a946abf1e743)) - **Funding Focused On In-House Model** - CEO Michael Truel said the new funding will go toward improving Composer, Cursor's in-house code model. - Owning the foundational model reduces reliance on third-party LLM vendors and saves revenue leakage. Transcript: Jaeden Schafer He was talking to the Wall Street Journal recently, and he told them that all of the money they've just raised from this round is going to be put towards developing Composer, which is Basically their new AI model. This was released back in October, and so now they are trying to improve this. ([Time 0:01:37](https://share.snipd.com/snip/14f09d88-3dab-475a-a7fb-f941c2c1011c)) - **Independence Drives Investment** - Building a proprietary code model frees Cursor from paying revenue share to OpenAI or Anthropic. - That independence is a key reason investors are comfortable writing huge checks. Transcript: Jaeden Schafer They're kind of wrapped around it and if there's any sort of politics or issues with those foundational code models, it can be really tricky. In addition, they have to pay a ton of their revenue to those code models to help. So the fact that they've actually developed their own AI model is obviously why they're able to raise so much money. ([Time 0:02:04](https://share.snipd.com/snip/c8f41928-876f-4e14-a059-0a8902485a3d)) - **Large User Base Gives Competitive Edge** - Cursor claims over 1M daily users and tens of thousands of enterprise customers including OpenAI and Salesforce. - Strong user adoption gives Cursor leverage despite intensifying competition from OpenAI and Anthropic. Transcript: Jaeden Schafer The company is growing very quickly. OpenAI and Anthropic are both really getting into coding products. OpenAI has their own tool and Cloud Code from Anthropic is obviously, you know, one of the preferred tools by all developers. So this is getting really competitive. But that's not to say Cursor won't be able to keep up up and up until this point. They have one of the largest user bases of coding developers of any other company. In the most recent numbers I could find, Cursor had over 1 million daily users and they have tens of thousands of enterprises. They have OpenAI, Instacart, Salesforce. ([Time 0:02:36](https://share.snipd.com/snip/eb6b46dc-a2ce-45ac-88d3-9d3c1c1bbdfa)) - **VS Code Base And Mixture-Of-Experts Model** - Cursor's editor builds on open-source VS Code and embeds Composer as one of its LLMs. - Composer uses a mixture-of-experts approach to route queries across specialized sub-models. Transcript: Jaeden Schafer One thing that I do find very interesting with cursor is the fact that their coding tool is actually built on top of Microsoft's open source VS code editor. So they have essentially kind of grabbed that open source project and built their own tool. One of the LLMs embedded in their editor, like I mentioned, is called Composer. This just came out in October. ([Time 0:03:32](https://share.snipd.com/snip/89f94846-8ef7-4e96-9ab0-b7291d897277)) - **Speed As A Product Differentiator** - Cursor claims Composer runs up to four times faster than comparable LLMs, finishing many coding tasks under 30 seconds. - Speed improvements matter because long-running code tasks frustrate developer workflows. Transcript: Jaeden Schafer This all happens in the background very quickly, so you're not going to notice it. You just ask a question, it will give you a response. But that's how it's working. It's an algorithm, it runs four times faster than LLMs with comparable output quality, according to them. So it can complete a lot of coding tasks in under 30 seconds. ([Time 0:04:22](https://share.snipd.com/snip/26e34ab5-4372-4bf1-894f-aff0fff8f986)) - **Prioritize Faster Code Models** - Use faster code models to reduce long idle compute times and speed up development cycles. - Prefer models that complete tasks in minutes rather than tens of minutes for practical productivity gains. Transcript: Jaeden Schafer Yes, you could go use OpenAI's product. But by using them, if you actually can get stuff done faster, a lot of people love that because I know for us, we use Claude Code at AI Box, which by the way, if you don't have it, go check out AIbox.ai. You can access to all of the top AI models in one place for 20 bucks a month. But we use Claude Code a lot to help us. It does take a very long time when we launch it on a task or a new project, it can sit there for 10 or 15 minutes working on the code base. So if you could bump that up four times faster, it does make a really big difference. ([Time 0:04:45](https://share.snipd.com/snip/b5bb997a-c1b2-4188-b44b-d21338f30d23)) - **Custom Kernel Work Avoided CUDA** - Cursor implemented Composer's kernels without CUDA, using low-level PXT to optimize for NVIDIA chips. - This engineering choice reportedly delivered more than 3x performance gains across components. Transcript: Jaeden Schafer So these are paralyzed snippets of code. They are all running across a whole bunch of graphics card cores at once. And developers, they're usually going to be writing kernels with the help of what's called a CUDA library. It's, you know, it's basically abstracts away some of the complexity that is associated with this. They have these kind of prepackaged code that removes the need to write everything from scratch. What's interesting here is Cursor says that they did not use any CUDA libraries while they were building Composer, and they said that they implemented the model's kernels using PXT. ([Time 0:05:21](https://share.snipd.com/snip/b4a1886a-e981-43e7-9d23-0b1586b94d5e))