Cognition, a startup developing the coding assistant Devin, announced it has raised $2 billion, resulting in a valuation of $48 billion. This funding round occurred four months after Cognition's previous fundraising, which valued the company at $26 billion. The round was led by Andreessen Horowitz, Accel, Founders Fund, General Catalyst, and Avenir.
The increased valuation indicates that venture capitalists believe there is potential for multiple significant players in the AI coding market. Cognition reported that its annualized run-rate revenue has increased from $492 million to $900 million since its last funding announcement in May. The company did not specify how it calculates this run-rate revenue, which is typically defined as a month's revenue multiplied by 12.
Another coding assistant, Cursor, was in discussions in April to raise funds at a $50 billion valuation before being sold to SpaceX for $60 billion later that month. At that time, Cursor's annualized revenue had exceeded $2 billion, suggesting that Cognition currently has a higher revenue multiple than Cursor did in the spring.
Cursor's sale to SpaceX was reportedly due to significant compute constraints, although it is unclear if Cognition will encounter similar issues. Cognition leases an Nvidia server cluster that costs hundreds of millions of dollars annually, which could lead to a total cash burn of $800 million this year, according to The Information.
Cognition is training its own model based on open-source alternatives, similar to Cursor before its acquisition by SpaceX. Reducing reliance on costly third-party models from OpenAI and Anthropic is expected to help lower costs and move the company closer to breakeven.
The Information projects that Cognition will achieve $4 billion to $5 billion in annualized revenue by the end of 2026, while TechCrunch reported that Cursor was on track to exceed $6 billion by year-end. Notably, a16z, a key investor in Cursor, is now leading a funding round for a competitor.
Founded in 2024 by Scott Wu, Cognition has major enterprise customers including Mercedes-Benz, NASA, Goldman Sachs, and Citi.