Cursor continues acquisition spree with deal with Graphite

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

Terms of the deal were not disclosed, but Axios reported that Cursor paid “well above” Graphite’s final valuation of $290 million. This valuation was set when the five-year-old company raised $52 million in Series B funding earlier this year.

This partnership makes strategic sense. The code output generated by AI is buggy, requiring engineers to spend a lot of time fixing it. While Cursor offers AI-powered code reviews through its Bugbot product, Graphite’s specialized toolset provides a unique feature called “Stack Pull Requests,” which allows developers to work on multiple dependent changes simultaneously without waiting for approval.

The combination of AI-powered code creation and AI-powered code review tools speeds up the process from drafting code to shipping.

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

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

Additionally, Cursor and Graphite have common investors including Accel and Andreessen Horowitz.

Cursor was valued at $29 billion last November and is pursuing acquisitions. Last month, the company acquired technology recruitment strategy firm Growth by Design. In July, Cursor poached talent from AI-powered CRM startup Koala at a post-money valuation of $129 million, according to PitchBook.