Hello friend,
AI Code startups raised over $1 billion in the last 12 months, and investors seem even more hungry for this (new) category!
In the past year, AI code tools such as Magic ($320M), Codeium ($215M), Cognition ($175M), and more have cumulatively raised a staggering $1.04 billion. And this doesn’t even include foundational model developers like OpenAI, Anthropic, or Mistral AI, which also have code-generation capabilities.
It’s clear now that top Silicon Valley investors like Andreessen Horowitz, Sequoia Capital, or Founders Fund are each backing their horse in the race for AI code domination. Why so much money (with the associated valuations)?
1. LLMs excel with extensive training data and coding benefits from an abundance of public data on GitHub, Stack Overflow, and beyond. This makes code generation one of the most potent applications of generative AI today.
2. AI code startups target the software development labour market, not just the DevTool space. With 26-28 million developers worldwide earning an average of $50,000 annually, we’re looking at a potential market of about $1.3 trillion annually. This expands further when considering millions more potential builders without formal coding skills.
3. AI code tools are already making money! GitHub recently revealed that GitHub Copilot generated $2 billion in ARR just a year after its launch. This underscores the significant commercial potential of AI in coding.
The next 12 months will see even more aggressive investment as adoption increases, models improve, and CTOs become more comfortable integrating AI code tools on a large scale.
I'm also betting we will see copilots appear everywhere in the software delivery lifecycle. Get ready to see an increasing number of Product Management copilots, DevOps copilots, Data copilots and QA copilots 🤖
P.S.: if you're a CTO or tech leader, you can join the free Unicorn CTO Slack community. We're a small group of international CTOs and tech leaders, and we often meet for virtual (or not) coffees.
P.P.S.: I'm doing a webinar this Wednesday, September 18th, at 6 pm CET (12 pm ET, 9 am PT) to share the findings of my report on H1 2024 Developer-First Startups Global Transactions. Check out the details below.
Now, let's dive into last week's developer-first transactions.
💰 Market Summary - Week of September 9th
- 6 companies raised $93.5M across 6 product categories in 3 countries.
- Europe-based companies attracted 2.1% of the total funding vs 13.6% for Asian-based companies and 84.3% for US-based companies.
- AI attracted the highest funding.
- 2 companies were acquired.
🧩 Funding by Product Category
🌎 Funding by Region
🏢 Funding By Company
webAI, from Austin 🇺🇸, raised $43M in a Series A round with X10 Capital and Kleiner Perkins. webAI simplifies AI model training and deployment by integrating cloud services and local devices. (more)
P0 Security, located in San Francisco 🇺🇸, garnered $15M in Series A funding backed by SYN Ventures, Zscaler, and Lightspeed Venture Partners to offer a cloud entitlement management solution. (more)
Odigos, based in Tel Aviv 🇮🇱, raised $13M in a Series A round. They automate the implementation of distributed tracing using eBPF technology, with investment from Venture Guides and Salesforce Ventures. (more)
StackGen, also in San Francisco 🇺🇸, achieved $12.3M in Seed funding from Thomvest Ventures and WestWave Capital. StackGen automatically generates infrastructure from code, reducing software development bottlenecks. (more)
Protege, based in New York 🇺🇸, secured $10M in Seed funding. Their platform connects data holders with users, aiming to streamline the introduction of data assets into the AI world. Investors include Charles River Ventures and SV Angel, among others. (more)
PLATMA, headquartered in Kyiv 🇺🇦, attracted $2M in Pre-Seed investment supported by Almaz Capital and EA Group. This extreme no-code platform translates simple English descriptions into web applications. (more)
🤝 Mergers & Acquisitions
MariaDB, headquartered in Redwood City 🇺🇸, was taken private by K1 Investment Management for an estimated $37M less than two years after going public. As a cloud database pioneer, MariaDB’s products are engineered to support diverse workloads and scale, significantly reducing proprietary database costs. (more)
WarpStream, based in Chicago 🇺🇸, was acquired by Confluent. WarpStream offers a Kafka-compatible data streaming platform that operates on top of object storage, promoting significant scalability and cost efficiency. (more)
📺 Webinar Invitation - Global Developer-First Transactions - H1 2024
I'm doing a webinar this Wednesday, September 18th, at 6 pm CET (12 pm ET, 9 am PT) to share the findings of my report on H1 2024 Developer-First Startups Global Transactions. Click below to attend. During the webinar, I will break down:
- Significant transactions: Highlighting the top deals and their impact on the ecosystem.
- Sector analysis: Detailed insights into pivotal sectors like AI, API, Cloud, and more, revealing where capital is flowing.
- Geographic focus: Which cities are attracting capital, beyond Silicon Valley.
- Future predictions: How current trends are expected to shape the developer-first ecosystem over the next 6 to 12 months.
Thanks for reading this far! I'm excited to make this newsletter as helpful as possible and I would appreciate if you could share feedback or anything you want to find here.
Farewell,
Daniel