AI startups revolutionize coding industry, leading to sky-high valuations

Two years after the launch of ChatGPT, return on investment in generative artificial intelligence (AI) has been elusive, but one area stands out: software development.

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So-called code generation or “code-gen” startups are commanding sky-high valuations as corporate boardrooms look to use AI to aid, and sometimes to replace, expensive human software engineers.

Cursor, a code generation startup based in San Francisco that can suggest and complete lines of code and write whole sections of code autonomously, raised $900 million at a $10 billion valuation in May from a who's who list of tech investors, including Thrive Capital, Andreessen Horowitz and Accel.

Windsurf, a Mountain View-based startup behind the popular AI coding tool Codeium, attracted the attention of ChatGPT maker OpenAI, which is now in talks to acquire the company for $3 billion, sources familiar with the matter told Reuters.