Cursor snaps up enterprise startup Koala in challenge to GitHub Copilot

The startup behind the viral AI coding app Cursor is snapping up high expertise from AI enterprise startups in a bid to bolster its competitors with Microsoft’s GitHub Copilot and win over companies trying to supercharge their staff with AI coding instruments.

In a single current case, Cursor maker Anysphere struck a deal to amass the AI-powered buyer relationship administration (CRM) startup Koala, two sources acquainted with the matter instructed Trendster.

As a part of the deal, Cursor will carry on a number of of Koala’s high engineers to construct out a devoted enterprise-readiness crew. Nevertheless, the complete Koala crew won’t be becoming a member of Anysphere, and Cursor doesn’t plan to combine the startup’s core CRM product, a supply instructed Trendster.

Koala plans to close down in September, the corporate mentioned in a weblog submit revealed on Friday. The announcement comes simply 5 months after Koala raised a $15 million Collection A led by CRV, with participation from HubSpot Ventures, Recall Capital, and Afore. Koala was almost 4 years previous; had roughly 30 staff, in line with LinkedIn; and had labored with shoppers comparable to Vercel, Statsig, and Retool.

Sources on this story requested anonymity to talk with Trendster about non-public issues. Koala and its founders didn’t reply to Trendster’s request for remark. Cursor declined to remark.

The Koala deal paints an image of the 2 sorts of AI startups we’re seeing in 2025. There’s Cursor, a juggernaut of an AI instrument that’s rising so quick it’s beginning to encroach on the AI house’s largest gamers, together with Microsoft and Anthropic. On the identical time, there’s a rising variety of startups like Koala: B2B AI startups that appeared promising — with a co-founder from Meta and advisers like Jack Altman — however have rapidly run out of steam.

Cursor is capitalizing on this disparity, leveraging middling AI startups as a method to construct out its personal enterprise choices. Anysphere additionally lately employed the CEO of cybersecurity startup Resourcely, Travis McPeak, to guide the corporate’s safety groups, in line with The Info.

These offers look lots like Massive Tech’s reverse acqui-hires, comparable to Meta’s current deal to rent Scale AI’s leaders. Very similar to in Meta and Scale’s deal, Cursor can now transfer rapidly to construct out new enterprise segments whereas leaving questionable companies behind.

Cursor hopes that Koala and Resourcely’s expertise will assist it evolve from a private developer instrument that engineers quietly use at work and develop into an enterprise‑broad platform that corporations pay giant contracts to entry. Most enterprises at the moment that supply staff an AI instrument select Microsoft’s GitHub Copilot, which works as an AI-powered extension to current built-in improvement environments (IDEs) comparable to VS Code or JetBrains.

Cursor, which is a stand-alone AI-powered IDE, must beat out GitHub Copilot to strike offers in lots of instances, and it usually does in head-to-head assessments. Nonetheless, Microsoft has the higher hand within the enterprise because of its long-standing relationships with legacy corporations, in addition to its giant gross sales, safety, and assist groups.

Within the final yr, Cursor has decisively constructed out its go-to-market and gross sales crew — which now incorporates dozens of staff. A number of Cursor staff now spend their days visiting the places of work of Fortune 500 corporations and exhibiting them how they will combine Cursor’s AI instruments into their enterprise, in line with an individual acquainted with the matter.

Cursor’s enterprise push appears to be gaining traction. Anysphere mentioned it reached $500 million in ARR in June and now works with greater than half of the Fortune 500, together with Nvidia, Uber, and Adobe. A supply acquainted with the matter says that income has since grown, and an more and more giant share of that development comes from enterprise offers.

However as Cursor competes with Microsoft, it additionally must fend off a rising area of threats.

Probably the most urgent one is Anthropic, an important accomplice to Anysphere, whose Claude Code product has grown quickly in current months. Cursor depends closely on Anthropic’s AI fashions to energy its personal coding merchandise. (As one in every of its greatest prospects, Cursor can also be very important to Anthropic.)

On the identical time, Google simply scooped up the management crew of Windsurf, a serious competitor to Cursor within the AI-powered IDE house. Cognition, the maker of the AI coding agent Devin, acquired the remainder of Windsurf’s crew, doubtlessly providing a major carry to each companies.

It’s value noting that every one of those are several types of AI instruments, however employers are inclined to view the merchandise equally: as AI instruments that may enhance the productiveness of software program engineers. These employers might need the proper thought. In any case, Anthropic, Microsoft, Cursor, and Cognition are all growing AI coding brokers that purpose to automate workflows fully, which can be the place the AI coding house converges.

You may ask, why is everybody competing with everybody else to construct AI coding merchandise? Coding instruments have develop into one of many first AI merchandise to search out “product market match” — the elusive purpose that makes the ears of enterprise capitalists perk up. AI coding merchandise are getting used day by day by hundreds of thousands of software program engineers, they usually have began to generate actual income.

The race isn’t nearly constructing the perfect AI coding instrument anymore, although. It’s about who can scale their enterprise operations the quickest whereas the market remains to be up for grabs. With the likes of Microsoft, Google, and Anthropic all transferring quick, Cursor’s acquisition technique might decide whether or not it joins their ranks or turns into one other startup that couldn’t scale quick sufficient.