Forget LLMs. Silicon Valley investors have a new favorite AI play.
Not long ago, Silicon Valley was dismissive of startups like Harvey. While OpenAI developed cutting-edge artificial intelligence models with the potential to shake up almost every industry, Harvey had a more modest goal: building software that makes OpenAI’s technology more useful for lawyers.
“The market’s perception of companies like us… was that they’re GPT wrappers,” said Harvey Chief Executive Officer Winston Weinberg, referencing a derisive term used to suggest the repackaging of OpenAI’s models. If investors “were going to put money into something,” he added, “it needed to be into OpenAI or Anthropic.”
Today, so-called AI wrappers are all the rage. Step into any venture capital office in Silicon Valley and you’ll hear investors buzzing about startups that offer AI chatbots, research tools and other software applications for coding, clinicians and customer service, all built at least in part on the backs of large language models (LLMs) created by other leading AI developers.
These startups are seeing revenue and valuations grow at a fast clip, often while spending a fraction of the amount that top AI model developers do on chips, data centers and talent. Harvey, founded in 2022, surpassed $50 million in annual recurring revenue in December, Weinberg said. Likewise, Anysphere, the startup behind the popular code-editing tool, Cursor, has hit $100 million in annual recurring revenue, according to people familiar with the matter, who spoke on condition of anonymity to discuss private information. (Anysphere did not respond to a request for comment.)
Michael Mignano, a partner at Lightspeed Venture Partners, likens this moment in AI to the original smartphone app boom nearly two decades ago. “Just like after the iPhone launched, there were millions of new mobile apps,” said Mignano, an investor in the AI notetaking service Granola, which uses technology from OpenAI and Anthropic. “Now with AI and LLMs, there will be millions of new AI products.”
Investors are eager to put their money into these services. Harvey raised a $300 million round earlier this year led by Sequoia at a $3 billion valuation. Anysphere raised a $105 million round led by Thrive Capital and Andreessen Horowitz in January valuing it at $2.5 billion. And VC demand is so high that founders like Varun Mohan say the conventional fundraising process “isn’t something we have to do.”
Mohan’s company, Codeium, which also offers an AI tool for coders, is currently raising money at a valuation near $3 billion in a round led by Kleiner Perkins, according to a person familiar with the matter. (TechCrunch earlier reported Codeium’s fundraising. Kleiner Perkins did not respond