Genuine question: how do the economics work to raise $60M, for a product that costs at most $40/month?
Assuming a 10x multiple on revenue, that requires $30M in ARR ($300M/10).
Cursor only needs 83k paying users to hit that ARR.
Github has over 100M users. Copilot has 1M users.
It's a new, growing market.
Meaning, Cursor would need to go from 0 paid users to 83k paid user ... just to justify that raise (and the investors don't even make money then).
https://visualstudiomagazine.com/Articles/2024/02/05/copilot...
https://github.blog/news-insights/research/the-economic-impa...
So valuation is 5*60m = 300m And expected annual revenue is 30m.
At 40/month they are expecting roughly 1M monthly actives. So I am guessing their pitch is with the vc money they will get to this number and beyond before the next funding round.
Reality is more like the founders got to cash "something" for their troubles and ability to sell the dream to others. Who knows may be they will hit it out of the park before the next round.
But there are many others like Accel and Caffeinated Capital
23 million * $40 * 12 => $11B per year in rev * ~10-12x revenue enterprise value => company could grow to be worth $100B+
So assuming you feel like you're getting a fair price for it today, then there's plenty of room for your money to grow.
> 23 million * $40 * 12
So you're assuming every single developer will pay $40 a month for Cursor??? And I say this as someone who does pay $20 a month for Cursor.
I also think it's quite the stretch to say the number of SWEs will grow meaningfully due to AI, especially when it seems like half the time you hear a pitch about how it will make software developers obsolete.
To be clear, I can easily understand how $60 million is a good investment, but I chuckle at the $100B+ valuation.
And right, some people claim AI will reduce number of SWEs. If you’re Cursor, you’re probably arguing the opposite.
23mil x 40 x 12 = 220.8 mil
I don't know how many developers want to give up their bespoke IDEs. Moving away from JetBrains products (even given all there warts) would be a hard sell for me. I also don't know how many developers even pay for an IDE.