VC Weekly #16 - AI takes over
Accel releases its Globalscape, Cursor reaches $29b valuation and the Anthropic-OpenAI battle rages on
This week, Accel released its Globalscape report this week. Besides its top 100 EU and 100 US AI companies, the report packed a few key insights, that are worth sharing:
Frontier model funding, as a share of total VC funding, has been increasing steadily since 2023, when it represented 24.9% of total funding. In 2025, it is expected to represent nearly 60% of total funding, driven by OpenAI’s $40b in funding, Anthropic’s $19b and xAI’s $15b.
If funding is concentrated in the US at the frontier model layer, Europe-based AI application companies are able to attract 66% as much capital as their US peers
AI applications are experiencing Product-led Growth on steroids. Viral, bottom-up adoption is driving their penetration in Enterprises, and they are building defensibility as users entrust them with their workflows and data. Over 75% of developers have now adopted an AI-based coding agent
To support AI developments, 117GW in extra data center capacity will be required. This translates into $4T in CAPEX between 2026 and 2030
$3.1T in AI data center revenue will be required over the 2026 - 2030 period to pay back that total CAPEX
Vertical-specific AI companies, that have already gained strong momentum (Harvey, Legora, Abridge) are set to capture an increasing share of spend on human labor, especially in industries where parsing through large quantities of documents is frequent.
Fundraises
Cursor raises $2.3b at $29b valuation
Cursor, the vibecoding startup, has raised $2.3b at a $29.3b valuation, from Accel, Coatue, Thrive, DST, Google and Nvidia. As part of the round, Cursos intends on deepening its relationship with Google, which provides cloud computing and other AI services to Cursor, and Nvidia, which uses the startups products. This brings the company’s total funding amount to $3.4b. In June, the last time it raised a funding round, it was valued at $9b
Cursor was founded in 2022 by Michael Truell, Sualeh Asif, Arvid Lunnemark and Aman Sanger while they were studying at MIT. The company launched its main product, Cursor, in March 2023. In the 12 months that followed, the company became the fastest in history to hit the $100m in ARR mark, and has since kept on compounding. It claims, at the time of this new fundraise, to have crossed $1b in ARR and to count millions of developers as customers
A few days before the fundraising announcement, Cursor competitor Lovable announced it had reached 8m users, up from the 2.3m active users it reported on in July, claiming that “100k new products are being built on Lovable every single day.” Despite warnings from a Barclays report this summer, that noticed that Google Search trends for Lovable and other vibecoding services were trending downward, Lovable boasts 100%+ Net Dollar Retention and counts more than half the Fortune 500 as customers.
The Vibecoding market is red hot these days with Cursor, Lovable, Repplit, Bolt, Windsurf and Cognition raising billions of dollars and all reaching well beyond $100m in ARR in record time.
Gamma hits $2.1b valuation and $100m in ARR
Gamma, which uses AI to generate Powerpoint presentations, websites and social media visuals, has raised a $68m Series B round at a $2.1b valuation, from Accel, a16z, Uncork Capital, Hustle Fund, South Park Commons and Script Capital. This brings the company’s total amount raised to $90m.
Gamma was founded in 2020 by Grant Lee and launched its first product in 2022. It wasn’t until it added generative AI tools to its products in 2023 that the company skyrocketed.
The company has grown to $100m in ARR with a team of 50 people, and with only $23m in funding. Gamma has 70m users globally, that have created 400m presentations and other visuals to date, and has been able to grow its business thanks to word-of-mouth. The company offers a tiered pricing model, with a free option, all the way up to an “Ultra” option which prices at $86 per user per month.
Although Gamma’s growth has been impressive, questions about horizontal application defensibility in the age of AI remain. Whereas vertical applications can maintain a competitive advantage by gathering valuable data about their clients that they can then feed back into their products, horizontal applications are more at risk of being overtaken by new, more powerful products. Gamma already faces stiff competition from the likes of Canva or Figma. Nevertheless, it has managed to build brand recognition with a product people love in a very short amount of time.
Scribe, a workflow mapping startup, has raised $75m at a $1.3b valuation from StepStone, Amplify Partners, Redpoint Ventures, Tiger Global, Morado Ventures and New York Life Ventures. Scribe has now raised a total of $130m in Venture Capital.
Scribe was founded in 2019 by Jennifer Smith and Aaron Podolny. Smith, a former McKinsey consultant, spent hours documenting and mapping employee workflows as part of her client engagements. They released their first product, Scribe Capture, while in stealth, helps clients automatically document their workflows by generating step by step guides of how specific tasks are being completed.
The company is used by 94% of Fortune 500 companies, counts 78k corporate customers and is used by 5m individuals. So far, the company has documented over 10m workflows across 40k software applications.
News
Coreweave reports doubling of revenue
Coreweave released its third-quarter results this week, reporting over 2x YoY revenue growth, from $583m in Q3 2024 to $1.36b in Q3 of this year. The company reported a $110m net loss, compared with a $359m loss a year earlier. Its revenue backlog now stands at $55b, in line with analyst expectations. Coreweave, which operates data centers powered by thousands of Nividia chips, a $14.2b deal with Meta, an additional $6.5b deal with OpenAI and a new deal with an unnamed hyperscaler. The company also counts Nvidia as a large shareholder, with 7% ownership.
Anthropic is on track to turn a profit much faster than OpenAI
Last week, the Wall Street Journal argued that Anthropic’s B2B-centric business model seemed more sound thant OpenAI’s consumer focused model. This week, the Journal dives into financial plans shared by the two companies to investors. What the numbers show is that indeed, Anthropic might be on track to turn a profit sooner than OpenAI. Indeed, the developer of Claude expects to turn a profit in 2028, with about $32b in annual sales. On the other hand, OpenAI expects to be profitable by 2030, when it will have reached about $200b in revenues. What’s more OpenAI expects to burn through 14 times as much capital as Anthropic to reach a profit.
On wednesday, Anthropic announced it had signed a partnership with UK-based Neo-Cloud Fluidstack, with the intention of deploying $50b in US-based data centers to cater to its compute needs. The sites will be located in Texas and New York and should be operational by the end of 2026. This investment will come in addition to Anthropic’s current cloud partnerships with Google and Amazon, and will provide the company with more customized infrastructure.
Masayoshi Son sells his $5.8b Nvidia stake
Softbank sold its entire stake in Nvidia, 32.1m shares, for a total of $5.8b. The sale is part of a set of financial initiatives undertaken by Softbank to finance its $22.1b investment in OpenAI. It has also sold $9.17b worth of T-Mobile shares, and has contracted a loan on margin on its Arm stake.
In 2019, Softbank already had a stake in Nvidia it had to sell for $3.6b, before purchasing sales of the company back in 2020. That initial stake would have been worth $150b today.
Softbank’s stake in OpenAI will increase from 4% to 11% and could invest further in the ChatGPT maker, but won’t cross the 40% threshold that would grant it a controlling stake in the company. In June of this year, Son claimed that he was “all-in” on OpenAI and stated his belief that OpenAI would eventually become the most valuable company in the world.