Anysphere raises $8M from OpenAI to build an AI-powered IDE

Anysphere, a startup building what it describes as an “AI-native” software development environment, called Cursor, today announced that it raised $8 million in seed funding led by OpenAI’s Startup Fund with participation from former GitHub CEO Nat Friedman, Dropbox co-founder Arash Ferdowsi and other angel investors.

The new cash, which brings Anysphere’s total raised to $11 million, will be put toward hiring and supporting Anysphere’s AI and machine learning research, co-founder and CEO Michael Truell said.

“In the next several years, our mission is to make programming an order of magnitude faster, more fun and creative,” Truell told TechCrunch in an email interview. “Our platform enables all developers to build software faster.”

Truell met Anysphere’s other co-founders, Sualeh Asif, Arvid Lunnemark and Aman Sanger, while at MIT, where they became close friends. The four shared the goal of creating an integrated development environment (IDE) that could speed up common programming and software building tasks, like debugging.

To that end, Cursor, which is a fork of VS Code, Microsoft’s open source code editor, packs AI-powered tools designed to help developers write — and ask questions about — code. Cursor can respond to queries like “What service in VS Code lets me save a state to disk?” and pull up relevant documentation and code definitions as programmers work.

Cursor also features generative AI capabilities powered by OpenAI models, namely the ability to generate code from a prompt. And it can passively scan files and surface potential bugs in codebases.

“When people think ‘AI plus coding,’ their mind usually goes to AI-powered autocomplete,” Sanger said via email. “We think this has been done particularly well by GitHub Copilot and others, so we’re focused on features that come after autocomplete, like finding and fixing bugs and codebase Q&A.”

Does Cursor have much hope of competing with the incumbents in the IDE space, though? That’s a reasonable question. According to StackOverflow’s 2023 Developer Survey, Microsoft’s Visual Studio Code remains far and away the most popular IDE, with ~73% of developers saying that it’s their go-to.

The Anysphere team, indeed, sees Microsoft is their main competitor. And they acknowledge that the tech giant has a substantial distribution advantage. But they make the case that, because Visual Studio Code has a wide and varied customer base, Microsoft can’t make radical changes or ship major upgrades very quickly without risking alienating a portion of its users.

“The ceiling in the AI coding space is so high — there’s so much to do — that it’s not possible to just clone the tech and then put great sales on top,” Truell said. “You need to constantly evolve the tech. There’s over 26 million developers around the world, and there’s a huge market for those that want a truly AI-native experience.”

The five-person Anysphere team is nothing if not ambitious, with a host of features they hope to get to on the development roadmap for Cursor. In the coming months, the plan is to enable Cursor to make more complex edits across files and entire folders, improve at finding code and learn new libraries from documentation.

In the meantime, Anysphere’s popularity is slowly growing, Truell claims, with tens of thousands of people on the platform and a “fast-growing” paying customer base. Annual recurring revenue is already over $1 million — an auspicious start for a roughly one-year-old company.

“For now, we’re focused on the individual and teams experience over Enterprise,” Sanger said. “In the long-term, we believe Cursor will be a no-brainer for enterprises, given the massive boost in developer productivity.”