AI Coding Assistants Magic and Codeium Secure Massive Funding Rounds

AI Coding Is Ultra Hot, With Magic And Codeium Revealing Big Rounds This Week

The intersection of AI and coding is one of the hottest areas for venture funding of late. But even in a heated investment environment, this week was exceptional. Two companies, Magic and Codeium, confirmed fundraises of $320 million and $150 million, respectively. The two are among a larger cohort of recently funded companies aiming to add efficiency and alleviate pain points for the code development process with AI-enabled tools. San Francisco-based Magic, which develops AI models to write software, said the new financing included backing from new investors Eric Schmidt, Jane Street Capital, Sequoia Capital and Atlassian Ventures. To date, the 2-year-old startup has raised over $465 million, according to Crunchbase data. Codeium, which is based in San Jose, California, and is working on an AI coding assistant, said funding for its just-closed Series C came from lead investor General Catalyst, alongside Kleiner Perkins and Greenoaks. The 3-year-old company says it is working on tools to improve code quality while also reducing cost and development time. The financings came amid a busy period for funding rounds around artificial intelligence and coding automation. Using Crunchbase data, we put together a list of nine companies innovating in this space that have raised sizable rounds in roughly the past year. Notably, many of these companies are moving quickly from one round to the next. Magic raised a prior big round in February. Codeium's Series C came just seven months after its Series B. And Silicon Valley-based Augment, developer of an AI coding aid, raised an April Series B just four months after its Series A. It's not hard to understand the appeal of what these startups are pitching. Code development has historically been an expensive, time-consuming and labor-intensive endeavor, faced with perennial talent shortages. If new AI tools can help with any of those issues, they're sure to find a welcome audience among companies of all sizes.

AI coding assistant startup Magic closes $320M round as rival Codeium nabs $150M - SiliconANGLE

AI coding assistant startup Magic closes $320M round as rival Codeium nabs $150M Magic AI Inc. and Codeium, two startups using artificial intelligence to make developers more productive, have both closed nine-figure funding rounds to support their growth efforts. Magic disclosed today that it recently raised $320 million from a group of prominent investors. Codeium, officially Exafunction Inc., announced in conjunction that it has closed a $150 million round at a $1.25 billion valuation. Both companies are using AI to automate repetitive tasks for developers, but they're taking different approaches to doing so. San Francisco-based Magic is developing foundation models optimized specifically for programming tasks. On occasion of today's funding announcement, the company detailed a new internally-developed AI dubbed LTM-2-mini. Magic says that it can process prompts containing up to 100 million tokens, which corresponds to about 10 million lines of code. The ability to ingest large amounts of code is useful for many programming automation use cases. An AI built to find software vulnerabilities, for example, must scan application files containing up to thousands of lines of code to find risky bugs. A search tool for developers may have to sift through multiple documentation repositories to find the explanation requested by a user. Magic put its LTM-2-mini model to the test by having it complete a number of coding assignments. In one experiment, the AI developed a tool that measures the strength of user passwords. In another internal test, LTM-2-mini created a virtual calculator. The $320 million investment that Magic announced today could help the company finance the development of additional AI models. The deal included the participation of former Google LLC Chief Executive Officer Eric Schmidt, Atlassian Corp., Jane Street and Sequoia. They were joined by several returning investors including CapitalG, Google parent Alphabet Inc.'s growth fund. Magic detailed the funding round alongside a new technical partnership with the search giant. The collaboration will give the startup access to two AI supercomputers hosted in Google Cloud. The first system, which the companies have named Magic-G4, will be powered by Nvidia Corp.'s H100 graphics processing units. The other supercomputer is known as Magic-G5 and will be equipped with up to tens of thousands of the chipmaker's latest Blackwell B200 chips. The latter processor can reportedly perform inference several times faster than the H100. Google detailed in a blog post that the two supercomputers will provide up to 160 exaflops of performance. One exaflop equals a billion billion computations per second. The world's fastest AI supercomputer, a system called Aurora that is operated by the U.S. Energy Department, achieved 10.6 exaflops of performance in a May benchmark test. Codeium, the other startup that announced a funding milestone today, has also equipped its programming assistant with the ability to process large amounts of code. According to the company, the tool can ingest an application's entire code repository. When a developer asks a question about a given program component, the AI can use its knowledge about the program's other modules to generate a more comprehensive answer. Codeium sells its software in the form of an extension for popular code editing applications. Once activated, the extension adds a chatbot to the interface of the editor in which it's installed. Developers can ask the chatbot to explain how a given code snippet works, fix any bugs it may contain and rewrite it to improve hardware efficiency . Codeium also provides a number of other AI features. One capability, Smart Paste, allows developers to copy a snippet of code and have it automatically translated into a new language before they paste it to a new location. Another feature called Forge can review changes to a code file for errors before the update is rolled out to production.

Magic Raises $320 Million to Develop AI Coworker for Coding

The investment brings the total amount the company has raised to $465 million, according to the post. Together with Schmidt, other new investors in Magic include Jane Street, Sequoia and Atlassian, per the post. "We believe the most promising path to safe [artificial general intelligence (AGI)] is to automate AI research and code generation to improve models and solve alignment more reliably than humans can alone," Magic said on its website. Magic also said in its blog post that it will build its next two supercomputers on Google Cloud. "We are excited to partner with Google and Nvidia to build our next-gen AI supercomputer on Google Cloud," Magic CEO and co-founder Eric Steinberger said in the post. "Nvidia's GB200 NLV72 system will greatly improve inference and training efficiency for our models, and Google Cloud offers us the fastest timeline to scale, and a rich ecosystem of cloud services." In February 2023, Magic raised $23 million in a Series A funding round, saying in a blog post that the funding would "accelerate our journey to build a true AI colleague for software engineering." "While today's code completion tools are already proving to be immensely useful, we can't wait to see what people build with magic," the company said in the Feb. 6, 2023, post. It was reported Aug. 23 that generative AI has quickly proven its value in powering coding assistants. AI-powered assistants offer developers a powerful new toolkit to brainstorm ideas, write and refine code, and fix bugs, PYMNTS reported in May.

Cursor Rival Codeium Raises $150 Mn, Becomes Unicorn with $1.25 Bn Valuation

Magic, another rival, closed a round of $320 million, including participation from Eric Schmidt, Atlassian, Jane Street, and Sequoia. While the debate around GitHub Copilot and Cursor AI is increasing, Codeium, an AI-powered code acceleration platform, announced that it has raised $150 million in a Series C funding round, propelling its valuation to $1.25 billion, becoming a unicorn. The round was led by General Catalyst, with continued participation from existing investors Kleiner Perkins and Greenoaks. This funding milestone marks Codeium's ascent to Unicorn status in less than two years since its inception. "The future of coding isn't just about writing lines of code faster -- it's about enabling developers to think bigger, push boundaries, and achieve the extraordinary," said Varun Mohan, CEO of Codeium. "This fresh funding means we're more equipped to help developers turn those 'what ifs' into 'what's next,' having the freedom to innovate without limits and turn challenges into opportunities for growth." Codeium's platform leverages proprietary code-based LLMs to streamline software development and enhance developer productivity. With the newly secured funds, the company plans to accelerate the development of new features, expand its product offerings, and increase its workforce. The focus will also be on strengthening partnerships to maximise AI strategies and broaden its market impact. Quentin Clark, Managing Director of General Catalyst, emphasised Codeium's rapid adoption in real-world production environments, stating, "Codeium isn't just an idea -- it's a fully scaling business with widespread enterprise adoption. Their genAI tools for software development are proving their worth in real production environments, where reliability is key." The funding announcement follows a period of significant growth for Codeium. The company has expanded its team to 80 professionals and grown its user base to over 700,000 active developers. In 2024, the enterprise product achieved eight figures in annual recurring revenue, with ARR increasing by over 500%. Additionally, Codeium now processes more than 100 billion tokens daily and has been integrated into production workflows at major companies such as Zillow, Dell, and Anduril. Codeium has proactively removed "non-permissively" licensed code, such as copyrighted code, from the datasets used to train its AI models. This step addresses a common issue with some code-generating tools that, when trained on restrictively licensed or copyrighted code, can inadvertently reproduce that code, leading to potential legal risks for developers. According to Mohan, Codeium avoids this problem through its careful preparation and filtering of training data. Recent technological advancements from Codeium include the launch of Cortex, an AI-powered reasoning engine for managing complex coding tasks, and Forge, an AI-assisted tool that enhances code review efficiency and culture. These innovations are part of Codeium's mission to transform software development by making coding faster, smarter, and more intuitive. In similar news, another AI coding assistant platform, Magic, closed a round of $320 million, including participation from Eric Schmidt, Atlassian, Jane Street, and Sequoia.

GitHub Copilot competitor Codeium raises $150M at a $1.25B valuation | TechCrunch

A startup whose product competes with GitHub Copilot and other AI-powered coding assistants has achieved unicorn status. On Thursday, Codeium said it closed a $150 million Series C round led by General Catalyst that values the company at $1.25 billion post-money. The round, which also saw participation from existing investors Kleiner Perkins and Greenoaks Capital, brings the company's total funding raised to nearly a quarter-billion dollars ($243 million) a mere three years since its launch. Codeium's co-founder and CEO, Varun Mohan, told TechCrunch that Codeium hasn't even touched the $65 million Series B tranche it raised in January yet. Back then, just eight months ago, Codeium was valued at half-a-billion dollars. "Even though we've barely made a dent in our existing funding, we believe that this injection of capital will allow us to significantly ramp up R&D and growth while making even larger strategic bets," he said. Codeium was founded in 2021 by Mohan and his childhood friend and fellow MIT grad, Douglas Chen. Prior to Codeium, Chen was at Meta, where he helped to build software tools for VR headsets like the Oculus Quest. Mohan was a tech lead at Nuro, the autonomous delivery startup, responsible for managing the autonomy infrastructure team. The startup began as a radically different company called Exafunction, focused on GPU optimization and virtualization for AI workloads. But in 2022, Mohan and Chen sensed a bigger opportunity in generative coding, and decided to rebrand -- and pivot. "Despite the influx of generative AI tools, developers are still struggling with time-consuming coding tasks," Mohan said. "Many of the AI-driven solutions provide generic code snippets that require significant manual work to integrate and secure within existing codebases. That's where our AI coding assistance comes in." Codeium's platform, powered by generative AI models trained on public code, serves up suggestions in the context of an app's entire codebase. It supports around 70 programming languages and integrates with a number of popular development environments, including Microsoft Visual Studio and JetBrains. To attract devs away from Copilot and other rivals, Codeium has released a generous free tier to start. The strategy seems to have worked: Today, the startup has more than 700,000 users and over 1,000 enterprise customers, including Anduril, Zillow, Dell and AthenaHealth. Quentin Clark, managing director at General Catalyst, implied that Codeium won some of its larger contracts by embracing a steadfastly client-centric approach to product research. "The team's approach has always been to follow its customers, leading the company to build solutions on their terms -- deployable in any environment and supporting more languages than anyone else," Clark said in a statement. "What Codeium has created isn't just a demo, an announcement, or an idea -- this is a fully-scaling business, with large enterprises adopting the product across their entire organizations." Businesses are often wary of exposing proprietary code to a third party -- for instance, Apple reportedly banned staff from using Copilot last year, citing concerns about confidential data leakage. To attempt to allay such fears, Codeium began offering a self-hosted installation option alongside its standard software-as-a-service plan. Companies can now deploy Codeium's service on their own hardware if they wish. Or they can adopt a hybrid setup, keeping their data on their own devices while using Codeium's servers for computing needs. There's always some risk involved in data transfers to the cloud, but Mohan claimed that Codeium leverages strong encryption. "We never train our proprietary generative autocomplete model on user data, never sell data and ensure all data transmission is encrypted," he added. Codeium has also taken steps to remove "non-permissively" licensed code (e.g., code under copyright) from the data sets it used to train its AI models. Some code-generating tools trained using restrictively licensed or copyrighted code have been shown to regurgitate that code when prompted in a certain way, posing a liability risk (developers that incorporate the code could be sued). Mohan said that's not the case with Codeium, thanks to its training data prep and filtering approach. "We also remove any remaining data that looks similar to code that is explicitly non-permissively licensed just in case other people copied code without providing the proper attribution and licensing," he added. "On top of this, we have state-of-the-art, post-generation attribution filtering and logging in the case that these large probabilistic models produce code that is similar to public code, whether permissively or non-permissively licensed." But what about hallucinations? Most AI coding tools are notorious for making stuff up, which can be quite destructive in an enterprise environment. An analysis by developer tooling startup GitClear found that generative AI tools have resulted in more mistaken code being pushed to codebases over the past few years. And a Purdue study found that over half the answers that OpenAI's ChatGPT gives to programming questions are incorrect. Security researchers have warned of the potential for such tools to amplify existing bugs in software. A recent survey from cybersecurity firm Synk found that nine in ten developers worry about the broader security implications of using AI coding platforms. But Mohan claimed that Codeium's supposedly superior, deep context-rich tech yields more trustworthy results than most. "Our context awareness engine is able to ground results in what is already existing in a user's codebase, leading to suggestions with fewer hallucinations and more adherence to existing syntax, semantics and standards," he said. Whether benchmarks back that up or not, Codeium's sales pitch seems to be resonating with the right execs: Revenue hit eight figures this year. Mohan said the 80-person, San Jose-based startup plans to expand headcount to 120 by 2025 as it aims to make a bigger dent in a market with formidable competitors like Tabnine, Anysphere and Poolside. Catching up to Copilot, which had over 1.3 million paying users as of April, probably isn't in the cards for Codeium -- at least not imminently. It doesn't have to be. As Mohan rightly noted, given the widespread adoption of AI coding tools among developers (despite their reservations), even a small slice of the nascent segment is bound to be lucrative. Polaris Research projects that the AI code tools market will be worth $27.17 billion by 2032. "An overabundance of hype is a challenge the industry faces," Mohan said. "This will make it harder for every company to truly convince end users that they are at the forefront of possibility. But we believe that truth-seeking and realistic AI companies like Codeium will eventually cut through this noise."

Codeium Reaches $1.25B Valuation with $150M Series C Funding Led by General Catalyst

MOUNTAIN VIEW, Calif.-(BUSINESS WIRE)-August 29, 2024- Today, Codeium, an AI-powered code acceleration platform, announced it has secured $150 million in Series C funding, raising the company's valuation to $1.25 billion and bringing the startup to Unicorn status in less than two years from inception. The round was led by General Catalyst, with continued support from existing investors Kleiner Perkins and Greenoaks. Every historical technological advancement has led to a steep change in developer possibility. AI is no different. Teams that leverage AI to empower their software development are going to build more, build faster and with higher quality. AI tools often promise help but fall short, offering fragmented, subpar support that complicates rather than simplifies work. Codeium breaks this pattern, delivering an AI-powered platform that transforms how developers work on complex codebases by making coding faster, smarter, and more intuitive. "The future of coding isn't just about writing lines of code faster-it's about enabling developers to think bigger, push boundaries, and achieve the extraordinary," said Varun Mohan, CEO of Codeium. "This fresh funding means we're more equipped to help developers turn those 'what ifs' into 'what's next,' having the freedom to innovate without limits and turn challenges into opportunities for growth." With actionable learnings and requests from its large and rapidly expanding set of enterprise customers, Codeium will use the fresh funds to accelerate the development of new features and products, and contribute to company headcount growth. Codeium plans to invest heavily in research and development, partnering with its customers to maximize their AI strategy, and exploring new strategic partnerships that can broaden its reach and impact. This comes on the heels of the company's latest launch of technological breakthroughs, including Cortex, an advanced AI-powered reasoning engine that manages complex coding tasks with exceptional precision, and Forge, an AI-assisted code review that reduces code review cycle times and improves code review culture. "Codeium isn't just an idea-it's a fully scaling business with widespread enterprise adoption. Their genAI tools for software development are proving their worth in real production environments, where reliability is key," said Quentin Clark, Managing Director of General Catalyst. "As we see it, Codeium's customer-driven approach has led to solutions that work in any environment, IDE, or SCM, with broader language support than anyone else." The news comes at a pivotal time for the company and follows a period of rapid growth for Codeium. Over the past two years, the company has assembled a team of 80 professionals and grown its user base to more than 700,000 active developers. The enterprise product reached eight figures in annual recurring revenue, with ARR growing by over 500% since early 2024. Codeium now processes more than 100 billion tokens daily, and has been integrated into production workflows at companies like Zillow, Dell, and Anduril, significantly boosting productivity. Codeium is a generative AI-powered coding platform that leverages proprietary code-biased Large Language Models (LLMs) to reduce inefficiencies in software development and maximize developer productivity. Designed for optimal flexibility, Codeium supports over 70 languages and integrates with over 40 Integrated Developer Environments (IDEs), such as Visual Studio Code, the JetBrains suite, Eclipse, and Jupyter Notebooks. ABOUT GENERAL CATALYST General Catalyst is a venture capital firm that invests in powerful, positive change that endures - for our entrepreneurs, our investors, our people, and society. We support founders with a long-term view who challenge the status quo, partnering with them from seed to growth stage and beyond to build companies that withstand the test of time. With offices in San Francisco, New York City, London, Berlin, Bangalore and Boston, the firm has helped support the growth of businesses such as: Airbnb, Deliveroo, Guild, Gusto, Hubspot, Illumio, Lemonade, Livongo, Oscar, Samsara, Snap, Stripe, and Warby Parker. For more: www.generalcatalyst.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20240829623867/en/