Index continues its acquisition spree with the Graphite deal

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

Although terms of the deal were not disclosed, Axios reported that Cursor paid “significantly more” than Graphite’s recent valuation of $290 million, which was set when the five-year-old company raised a $52 million Series B earlier this year.

The connection makes strategic sense. The output of AI-generated code is often buggy, forcing engineers to spend a lot of time on patches. Although Cursor offers AI-powered code review through its Bugbot product, Graphite’s specialized toolset offers a distinct capability called “stack pull request.” Which enables developers to work on multiple dependent changes simultaneously without waiting for approvals.

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

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

Cursor co-founder and CEO Michael Trowell 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 Neo, Ali Partovi’s early venture company. Neo backed Graphite at the seed stage, according to PitchBook data.

Furthermore, both Cursor and Graphite have other co-investors, including Accel and Andreessen Horowitz.

Cursor, which was last valued at $29 billion in November, has been on a takeover spree. Last month, it acquired Growth by Design, a technology recruitment strategy firm. In July, Cursor acquired talent from AI-powered CRM startup Koala for a post-money valuation of $129 million, according to PitchBook.