San Francisco-based Magic, an innovative startup developing AI models to write software, is reportedly in talks with investors to raise a fresh $200 million. This new round of funding would value the company at an impressive $1.5 billion, tripling its valuation from just five months ago. According to a Reuters report, Magic has yet to generate revenue or offer a product for sale, highlighting the significant investor interest in the AI coding software sector.
Magic’s New Funding Round
According to the Reuters report, Magic last raised a $117 million round in February led by NFDG Ventures, which also included participation from CapitalG and Elad Gil. This upcoming funding round is expected to include investment from Jane Street Capital, further demonstrating the high level of interest in AI software development technologies.
We've raised $117M from @natfriedman and others to build an AI software engineer.
Code generation is both a product and a path to AGI, requiring new algorithms, lots of CUDA, frontier-scale training, RL, and a new UI.
We are hiring! pic.twitter.com/I3fOLmrKA8
— Magic.dev (@magicailabs) February 15, 2024
Investors and Valuation
If successful, this round will mark a significant milestone for Magic, pushing its valuation to $1.5 billion. This substantial increase from its previous valuation underscores the confidence investors have in the potential of AI coding software to completely transform the software development industry.
Very excited to welcome @karpathy as Magic's latest investor!
— Eric Steinberger (@EricSteinb) February 27, 2024
The Hot AI Software Development Sector
AI technology is transforming the software development landscape. Investors are particularly interested in AI’s ability to accelerate application and software development, reduce costs, and address the shortage of skilled developers. AI coding software promises increased productivity and efficiency, making it a highly attractive investment.
Comparison with Other AI Startups
Magic is not alone in attracting investor attention. Other notable startups in the AI coding space include:
- Builder.ai (London): Raised over $250 million in Series D funding led by Qatar Investment Authority.
- Augment (Palo Alto): Secured $227 million in a Series B round at a $977 million valuation.
- Cognition (San Francisco): Locked up a $175 million investment led by Founders Fund, valuing the startup at $2 billion.
Future Prospects for Magic
Founded in 2022, Magic has quickly risen to prominence, raising $145 million to date. With the anticipated new funding, Magic is well-positioned to further develop its AI coding models and potentially transform the software development industry. The rapid growth and high valuations of AI startups like Magic shows the transformative potential of AI in software development. As the technology continues to evolve, it could reshape the industry, offering new efficiencies and capabilities.
What Does This Mean for the Future of AI in Software Development?
As AI software development technology continues to evolve, it could reshape the industry, offering new efficiencies and capabilities. The question remains: how quickly will AI coding software become a standard tool for developers, and what impact will this have on the broader tech ecosystem? Let us know your thoughts in the comments.
Photo by Lala Azizli on Unsplash
