AI Coding Startups Lovable and Cursor Hit Massive Valuations as Demand for Developer Tools Surges
- Category: Branding
- Date 07-09-2025
AI coding companies had a good week.
Sweden-based Lovable, a startup that offers vibe-coding, is reportedly raising funds at a $6 billion valuation, Forbes reported on Friday. The funds would follow a $1.8 billion valuation it secured after its $200 million Series A in July.
The news comes on the heels of AI coding firm Cursor announcing a $2.3 billion funding round, which has skyrocketed its valuation to $29.3 billion, more than 12 times its January valuation.
The popularity of these platforms extends beyond investor attention.
Lovable has seen rapid growth in recent months, reaching $100 million in subscription sales since its launch in November. CEO Anton Osika said last week that it is nearing 8 million users and that 100,000 new products are built daily on the platform.
As for Cursor, the company said it surpassed $1 billion in revenue and has drawn in more than one million users.
These tools are popular for a simple reason: They make engineers work faster, Thomas Randall, research Director at Info-Tech Research Group, told The Deep View.
“These tools reduce cognitive load by integrating code generation, debugging, and refactoring into familiar environments like VS Code,” he said. “These tools succeed because they translate AI model advances into immediate, tangible workflow benefits for developers.”
And despite their popularity, the market is far from saturated, he said. Because these tools are making coding more accessible to non-software engineers, such as data scientists, IT professionals and low-code “citizen developers,” these companies are actively increasing their total addressable market just by the nature of their products.
But it might not remain that way forever, he noted. In the medium-term, these platforms may be forced to differentiate themselves to stand out with things like enterprise software integrations or compliance frameworks, he said. And in the long-term, sustainable profitability may require these companies to stop leaning on external model providers – especially as those companies push their own AI coding offerings.
While these tools can supercharge a good software engineer and remove a barrier to entry for a novice, they’re also creating an existential crisis for young techies. A Stanford University study published in late August found that employment for software developers ages 22 to 25 is down nearly 20% from its peak in late 2022. A July study from Microsoft detailing the top 40 occupations most exposed to generative AI included data scientists and web developers on the list.
However, whether these models are good enough to replace their human counterparts is still up for debate. While these tools can rapidly spit out lines of code, they, like all AI models, still hallucinate and make mistakes. With fewer human eyes, it may be easier for bugs to slip through the cracks.