There isn’t a shortage of AI-powered coding assistance startups. They include Augment, Codeium, Magic, and Poolside.

However, Cursor has become one of the most popular. Its developer, Anysphere, has seen its revenue grow from $4 million annualized recurring revenue (ARR) in April to $4 million a month as of last month, according to a person with direct knowledge of the company’s financials. The company is experiencing faster user adoption and growth compared to other coding assistant providers, another person said.

Such fast growth has VCs flocking to it. Anysphere has received unsolicited offers valuing the company at as much as $2.5 billion from Benchmark, Index Ventures, and previous investors  Andreessen Horowitz and Thrive, among others, the person said.

Index Ventures declined to comment. Anysphere, Benchmark, Andreessen Horowitz, and Thrive didn’t respond to requests for comment.  

Interest in the company has exploded so fast that last week, the unsolicited offers started at a $1.5 billion valuation, but have already risen to $2.5 billion, the person with direct knowledge of the company said. Sources also told The Information that investors are willing to price the company at $2.5 billion.  

This compares to the $400 million valuation of Anysphere from just four months ago, when it raised a $60 million Series A led by Andreessen Horowitz and Thrive. Patrick Collison, Stripe co-founder, also joined the round.

The company was co-founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark, and Aman Sanger while they were students at MIT. Last year, Anysphere graduated from OpenAI’s accelerator program and became its most prominent graduate. The company then raised an $8 million seed round led by OpenAI’s Startup Fund, with participation from former GitHub CEO Nat Friedman and Dropbox co-founder Arash Ferdowsi.

Most engineers are already using coding assistants like Cursor, and some VCs anticipate that these tools will soon allow startups to hire fewer software developers.