In the rapidly evolving landscape of AI coding tools, Cursor, the startup behind the viral AI coding app, is making significant moves to bolster its position against competitors like Microsoft’s GitHub Copilot. By acquiring top talent from AI enterprise startups, Cursor aims to entice businesses seeking to enhance their employees' productivity with AI-driven coding solutions.
Anysphere, the creator of Cursor, has recently secured a deal to acquire Koala, an AI-powered customer relationship management (CRM) startup. This acquisition will see several of Koala’s leading engineers joining Cursor to form a dedicated enterprise-readiness team, although not the entire Koala team will be moving to Anysphere, and there are no plans to integrate Koala's core CRM product.
Koala, which is set to shut down in September, raised $15 million in Series A funding led by CRV, with participation from HubSpot Ventures, Recall Capital, and Afore, just five months prior. Despite having a promising start with a co-founder from Meta and advisors like Jack Altman, Koala, like many B2B AI startups, has run out of steam.
Cursor's strategy involves leveraging the talent from中等规模 AI startups to expand its enterprise offerings. In a similar move, Anysphere hired Travis McPeak, the CEO of cybersecurity startup Resourcely, to lead its security teams. These acquisitions echo Big Tech's reverse-acquihires, allowing Cursor to quickly develop new business segments while leaving less viable businesses behind.
Cursor's goal is to transition from a personal developer tool to an enterprise-wide platform, competing against Microsoft’s GitHub Copilot, which is an AI-powered extension to existing integrated development environments (IDEs). As a standalone AI-powered IDE, Cursor often outperforms GitHub Copilot in head-to-head tests. However, Microsoft's longstanding relationships with legacy companies and its extensive sales, security, and support teams give it a competitive edge.
Cursor has been proactive in building its go-to-market and sales team, which now consists of dozens of employees. They actively visit Fortune 500 companies to demonstrate the integration of Cursor's AI tools into their businesses. This enterprise push has been gaining traction, with Anysphere reporting $500 million in annual recurring revenue (ARR) in June and working with over half of the Fortune 500, including NVIDIA, Uber, and Adobe.
However, Cursor faces increasing competition, including from Anthropic, a crucial partner whose Claude Code product has seen rapid growth. Cursor relies heavily on Anthropic’s AI models for its coding products. Additionally, Google has acquired the leadership team of Windsurf, a major competitor in the AI-powered IDE space, while Cognition, the maker of the AI coding agent Devin, has acquired the rest of Windsurf’s team.
The competition is not just about creating the best AI coding tool; it's about scaling enterprise operations swiftly while the market is still fluid. With giants like Microsoft, Google, and Anthropic moving fast, Cursor’s acquisition strategy could determine whether it joins their ranks or becomes another startup that couldn’t scale fast enough. The race for AI coding products is on, as these tools have found "product-market fit," a goal that excites venture capitalists and is already being used daily by millions of software engineers, generating substantial revenue.