AI coding startup Magic AI Inc. is reportedly in discussions to secure over $200 million in a funding round, potentially tripling its valuation to $1.5 billion. This comes just a few months after its previous capital raise.
What Happened: Magic, a U.S.-based startup that specializes in developing AI models to write software, is in the process of raising more than $200 million in a new funding round, Reuters reported, citing three sources. This would value the company at $1.5 billion, a threefold increase from its last valuation.
Despite having no revenue and no product for sale, Magic’s valuation is expected to soar in this new funding round. Investors, including Jane Street, are anticipated to take part in the round.
The startup, which currently has about 20 employees, was last valued at $500 million after its previous fundraising in February. Since its establishment in 2022, Magic has raised $140 million from backers such as Nat Friedman and Daniel Gross‘ NFDG Ventures, as well as Alphabet Inc.’s CapitalG.
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Magic’s new round is part of a larger trend in the AI industry. The success of Microsoft Corp.’s GitHub has further fueled investors’ interest in AI technologies. Other startups in this space, such as Augment and Cognition, have also seen significant funding rounds.
Investors believe that the market for AI code assistants is substantial, as evidenced by GitHub Copilot’s success, which has 1.3 million paid subscribers. Magic and a few other startups are working on training their large language models for coding-specific tasks, a costly endeavor that requires significant investment in data, chips, and electricity.”
Magic AI Inc. did not immediately respond to a Benzinga request for a statement.
Why It Matters: The AI industry is witnessing a surge in funding rounds and valuations. Recently, Abnormal Security, an AI-powered cybersecurity startup, was reported to be valued at $5 billion in a new funding round. This valuation represents a significant increase from its previous valuation.
In June, Microsoft announced a $100 million investment in Touchcast Inc., a startup specializing in caching generative artificial intelligence queries. This move aimed to reduce computational and energy requirements for models like OpenAI’s GPT-4.
In another development, Lambda Labs, a Silicon Valley startup, is in discussions to raise an additional $800 million to expand its AI infrastructure, driven by the surging demand for AI computing.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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