Cursor continues acquisition spree with Graphite deal

AI coding assistant Cursor announced that it has acquired Graphite, a startup that uses AI to review and debug code.

Although the terms of the deal were not disclosed, Axios reported that Cursor paid “way over” Graphite’s last valuation of $290 million, which was set when the five-year-old company raised a $52 million Series B earlier this year.

The tie-up makes strategic sense. The output of code generated by AI is often buggy, forcing engineers to spend a lot of time on corrections. Even though Cursor offers AI-powered code review through its Bugbot product, Graphite’s specialized toolset provides a distinct capability called a “stacked pull request,” which enables developers to work on multiple dependent changes simultaneously without waiting for approvals.

Combining AI-powered code writing with AI-powered code review tools speeds up the process from drafting code to shipping it.

Other startups providing AI-powered code review include CodeRabbit, valued at $550 million in September, and a smaller competitor, Greptile, which announced a $25 million Series A this fall.

Michael Truell, co-founder and CEO of Cursor, first met Graphite’s co-founders, Merrill Lutsky, Greg Foster, and Tomas Reimers, before launching the company as a Neo Scholar, a prestigious program for college students run by Neo, Ali Partovi’s early-stage venture firm. Neo backed Graphite at the seed stage, according to PitchBook data.

Furthermore, both Cursor and Graphite have other investors in common, including Accel and Andreessen Horowitz.

Cursor, which was last valued at $29 billion in November, has been on an acquisition spree. Last month, it purchased Growth by Design, a tech recruiting strategy company. In July, Cursor scooped up the talent from AI-powered CRM startup Koala for a post-money valuation of $129 million, according to PitchBook.