Cursor: The fastest growing startup to hit $200M ARR ever?? 🚀

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Hi 👋, this is the Today in AI Newsletter: The weekly newsletter bringing you one step closer to building your own startup.

We analyze a cool, industry-shaping AI startup every week, with a full breakdown of what they do, how they make money, how much they’ve raised, and the opportunity ahead. 

Let’s get to the good stuff in this email: 

• 💨 This startup is making coding 10x faster with AI without breaking dev workflows. 

• 🚀 They’ve already hit $200M ARR only 2 years after launch. 

• 💰 They’ve just raised a $625M at a $9.6B valuation led by Thrive and a16z 

So what’s the startup and who are the founders behind it? Here’s the story of Cursor 📈

Cursor was co-founded in 2022 by Micheal Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger with the mission to make the best coding experience EVER.

Cursor is an AI-powered IDE that turns natural language into working code. Built on top of VS Code, it integrates large language models, including its own, to supercharge developer productivity. ⏩

The editor analyzes a programmer's actions and suggests the next few lines of code, while also providing a chatbot for code-related questions. 🤖

Some of its core features include: 📋

• AI code generation: Build functions or entire apps with simple prompts 💡

• Autocomplete with context: Taps into your entire codebase to suggest accurate completions 🔍

• Refactoring + smart rewrites: Rewrites multiple lines intelligently ✍️

• Codebase search: Query your codebase in plain English 📚

• Agent Mode: Automates tasks end-to-end while keeping you in the loop 🤖

Think of it like having a junior dev on standby 24/7 — except it writes code at the speed of thought. ⚡

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Backstory 👀

Michael Truell grew up obsessed with programming, even creating one of the world’s most popular programming games at the age of 14. 💻

He went on to attend MIT, doing a double major in Computer Science and Mathematics. 🎓While at MIT, he worked at Google developing LLMs for news recommendation systems. 

Sualeh Asif grew up in Pakistan and was obsessed with Maths and CS from an extremely young age. He even represented Pakistan in high school at the International Mathematical Olympiad (IMO). 🌍

He also then went on to study at MIT, majoring in Machine Learning and interning at IBM with a focus on neural machine translation architectures. 🎓

Arvid grew up in Sweden, also a math genius winning a silver medal at the IOI in 2017, and a gold medal in 2018. He also attended MIT, also working at QuantCo, Stripe, and Jane Street.

Aman has a slightly different background, doing medical AI research while at MIT while being the two-time All-American squash captain at MIT. 🏆 He also ran an AI consultancy before Cursor. 

Long story short, all co-founders are technical, pretty cracked, and have been obsessively building from a young age. 👶

They all met at MIT and bonded over this obsession for building out tools and changing the way people build. 

The Hustle 🤑

Initially, they started building tools for mechanical engineers. They thought mechanical engineering tools were incredibly tedious and thought they could build an “autocomplete-like” model for CAT (Caterpillar). 🔧

They then realised that it wasn’t really a founder-market fit. 💔None of the co-founders were really mechanical engineers. 

While building this out, they always came back to code and potentially working on an “autocomplete” for code. 💻

Coding was a much more crowded market, but they had this thesis that you needed to own both the interface and IDE instead of using third-party. ⚙️

They focused on building the UX to start with, and experimented with just building better models to start working on the IDE. 🛠

By January 2023, they started working on the IDE and did 3-4 months of experimenting until finding something that fit. ⏱

They then shipped their first MVP alongside the release of GPT-4 and had some initial traction, but nothing stuck. The hype died down and usage tanked. 📉

That entire summer, growth had been incredibly slow and it was demoralizing. 😞 At one point they were questioning if their mission was just too ambitious.

One really magical thing kept them going: The founders themselves were the ultimate users for it. ✨

Towards the end of 2023, the founders shipped 2 core features that worked extremely well: 🚀

1. An Instructed edit ability (Command + K on Cursor) ✍️

2. Codebase Indexing - The ability to ask Cursor any question about your codebase 🔍

After both of these integrations, growth finally started to take off. 🚀

By the end of 2023, Cursor raised an $8M seed, hit $1M in ARR and by January 2024, they had 30,000 daily active users. 📈

 Keep in mind, this entire time they’d been operating with a team of 4 - just the co-founders. Just shows you the power of an entirely technical founding team. 👥

Stats 📊

📈Only 12 months after hitting $1M in ARR, Cursor hit $100M ARR with $0 in marketing spend… 

For comparison, here’s how long it took other startups to go from $1M to $100M ARR:

• Wiz took 18 months 

• Deel took 20 months 

• Ramp took 24 months 

This makes Cursor the fastest-growing SaaS startup in history to reach this milestone.

💸 Fast forward to today, Cursor has hit $200M ARR with a 60-person team. 

👥 They’ve also just reached over 1 million users and over 360,000 paying users including some of the world’s most innovative startups, research labs and valuable enterprises in the world. 

💰 According to an insider GP at a multi-stage VC on X/Twitter “Arfur Rock”, Cursor just closed a $625M Series C at a $9.6B post-money valuation led by Thrive and A16z with participation from Accel bringing their total raised to ~$800M. Previous investors in Cursor include OpenAI Startup Fund, Benchmark, Patrick Collison (Stripe) and Nat Friedman (Github).

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