U.S. Startup Magic Seeks $200M Funding to Triple Valuation to $1.5B
Magic, a U.S. startup specializing in AI models designed to write software, is currently in discussions to raise over $200 million in a new funding round in an exclusive report by Reuters. According to sources familiar with the matter, this investment is projected to elevate the company’s valuation to $1.5 billion.
The upcoming funding round is expected to see participation from notable investors, including Jane Street. This round could potentially triple Magic’s valuation from its previous round, despite the company not yet generating revenue or having a product available for sale. Sources requesting anonymity disclosed these details to Reuters.
Magic, which was founded in 2022, currently employs about 20 people. In its last fundraising round in February, the company was valued at $500 million, according to PitchBook data. Since its inception, Magic has raised $140 million from backers such as Nat Friedman and Daniel Gross’ NFDG Ventures, along with Alphabet’s CapitalG.
Magic’s new fundraising efforts are just another example of the increasing interest in generative AI technologies, particularly in their application to software development. As tech companies face significant costs related to software development, tools that can generate code or assist developers in writing code more efficiently are becoming highly attractive.
The success of Microsoft’s GitHub Copilot has further fueled investor enthusiasm in this space. For instance, coding-assistant startup Augment raised $252 million in April, while Cognition, the developer behind the AI-powered coding assistant Devin, secured $175 million in a round led by Founders Fund, reaching a $2 billion valuation.
Investors view GitHub Copilot’s success as a clear indicator of the market potential for AI code assistants and personas. GitHub reported a 40% year-over-year revenue increase in its latest quarter, driven largely by Copilot, which boasts 1.3 million paid subscribers.
“The success of Microsoft has validated the commercial market for AI code assistants, leading everyone to believe there is clear market demand and a customer willingness to pay for the right product. The opportunity is enormous, with likely multiple winners in this category,” said Brian Dudley, partner at Adams Street Partners.
While current AI tools like GitHub Copilot and OpenAI’s ChatGPT can suggest code completions, the future will still likely see humans leading the way in code development.
Originally posted on OpenDataScience.com
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