There's a lot of buzz around Cursor by Anysphere lately and every AI-savvy developer I've met or spoken to in the last few months shower heaps of praise on this tool and how intuitive it feels. We were in Bangalore few weeks ago discussing AI Agents from a GTM perspective with some like-minded people ( My summary of learnings from the discussions) and one of the attendee, an engineering leader told that his team uses Cursor AI to write code for test cases much faster. "How fast is faster exactly?", I asked and met with a sharp answer "What used to take 2 months and cost ~$18K can now be done in less than a week for $10K". That's some serious ROI I thought. Later that week someone had posted in LinkedIn that Cursor AI clocked $100 Million in revenue within 12 months, becoming the fastest growing SaaS company in history. I felt like that mafia boss watching the Joker burn a room full of cash in the movie "The Dark Knight" because, I remember struggling to close deals and work across TMZ's to reach $1 Million revenue in a previous life and this news questioned the value of $1 Million in current days worth, in this edition of the AI Brains Newsletter, we'll explore how a 20 member team made the fastest $100 Million in history.
1. Product-Led + Generous Freemium.
Cursor's enormous growth can be attributed to its 360K paid users, mostly developers who found Cursor through word-of-mouth in developer communities and social media, as programmers shared success stories of an AI pair-programmer that dramatically sped up their workflow. Cursor did not employ a sales team targeting CIOs or cold calling Enterprises. They consciously decided to invest in R&D and focus on creating a superior product experience for developers.
Cursor found instant resonance as an AI-powered code editor (built as a fork of VS Code) that seamlessly assists with writing, editing, and automating code. Its focus on solving real developer pain points – like code generation, refactoring, and debugging via AI –created a strong product - market fit among developers.
Making the most out of the Free trial.
In a world where you are expected to upgrade software to a paid plan in 5 clicks of signup or to access the important features, Cursor's Freemium plan is realistic from a user angle which allows 2000 code completions per month and access to paid features on a queue. 2000 free code completions / month is a good way to hook developers into using the tool. Once they reach the limit, they can swipe their credit card and move to a paid plan which again is $20 USD/ month.
Enabling a generous trial also solves for adoption problem from users who churn after momentarily upgrading to a paid plan when evaluating features, Increasing stickability.
2. What sets Cursor apart from Competition.
Multi-Modal advantage : Cursor's capability to integrate different state-of-art models like GPT-4 or Claude into the text editor giving contextually relevant code completion and chat responses compared to Github's version of GPT 3.5 Codex. The multi-model approach not only improves answer quality but also resilience – if one model struggled, it could tap another. This technical edge in AI capability make Cursor’s suggestions notably more accurate and “smart"
Code Editor > Plugin : Cursor is a standalone, AI-first code editor rather than just a plugin. It’s essentially a fork of VS Code with AI capabilities woven throughout the experience. This allows Cursor to deliver features beyond simple autocomplete: it has a built-in “Composer” AI chat sidebar that lets developers have conversations about their code, get explanations, and even execute tasks via the AI.  By contrast, GitHub Copilot began purely as inline code suggestions and only later added a separate chat (Copilot X), and Codeium is an add-on to existing IDEs. Cursor’s all-in-one approach yields a more seamless and deeply integrated workflow for users who adopt the Cursor editor.
In Built Context Awareness : Cursor automatically indexes entire codebases and uses embeddings to retrieve relevant context, meaning it can reason about your whole project ( via a .cursorignore file). Which users find more helpful.
Enhanced User Experience & Developer Tools : Cursor’s intuitive UX and powerful features tailored to coding is a huge differentiator. Its AI chat retains conversation history and relevant code context, allowing iterative problem-solving (you can have a back-and-forth dialog refining a function). Notably, Cursor learns the developer’s coding style over time – it adapts to patterns in your project, improving suggestions the more you use it.
In this Blog, the author observes “Cursor AI looks at each project one at a time. It learns how the developer codes and gets better at helping as time goes on,” whereas Copilot draws from a broad base of open-source code without project-specific learning
With an estimate of 27 Million Developer population across the world, one can only say that Cursor has just scratched the surface of its true potential.
3. Tapping into familiar Ecosystems
Cursor smartly leveraged ecosystems: it piggybacked on VS Code’s ubiquity and OpenAI/Anthropic’s AI advances. Being VS Code-compatible meant instant familiarity for developers and easy integration with their existing toolchain. Aligning with OpenAI (through the startup fund and by using OpenAI’s API) gives Cursor early access to powerful models and credibility in the AI community. In essence, Cursor partnered with the developer ecosystem itself – it integrated with Git workflows, supported nearly any programming language (language-agnostic), and even allowed community contributions (since it’s built on open-source). This strategy of openness and compatibility removed adoption friction and positioned Cursor as the natural next step in a developer’s toolkit, rather than a closed proprietary system.
4. The Significance of Cursor's success
Launched in 2023, Cursor grew 9900% in 2024 acquiring 3,60,000 paying customers without a GTM engine. Reaching $100 Million is no easy task with an average ACV of ~$267 / user.
When you compare this to other SaaS rocket ships, the numbers are jaw-dropping:
Wiz: 260 customers, $384K ACV
Deel: 1,800 customers, $55K ACV
Ramp: 5,000 customers, $20K ACV
All of these companies targeted enterprise customers with sky-high average contract values (ACVs) in stark contrast to Cursor's Developer army of faithful users. The most notable part here is that Cursor by itself is a GPT / Claude wrapper company that outpaced Open AI in reaching $100M new business. Cursor is highlighted as a company that “redefines how AI tools scale” and a bellwether for the AI-first SaaS model in the enterprise. The important lesson here is innovating and building products that actually solve a real world problem and not a surface problem.
Found by four Massachusetts Institute of Technology students in 2022, the company went through OpenAI's Startup accelerator program before raising a $60M Series A in mid-2024 co-led by Andreessen Horowitz, then a $105M Series B (Jan 2025) led by Thrive Capital at a $2.5B valuation and backed by notable angels like OpenAI's, Patrick Collison & Nat Friedman.
5. Conclusion
Cursor AI’s meteoric rise to $100M ARR is no accident – it's a combination of a thoughtful product with clear market fit, a growth strategy to turn users into champions, and smart business execution. By focusing on developers first, bringing superior AI into where their users live, and scaling via a freemium model, Cursor not only hyper-scaled its revenue but also built a moat against incumbents. With an estimate of 27 Million Developer population across the world, one can only say that Cursor has just scratched the surface of its true potential.
Innovation is not a word.
P.S - I am talking to developers using Cursor, GitHub's Copilot, Codeium, AWS Code Whisperer for honest reviews / feedback about these platforms and their ROI, if anyone would like to contribute, please comment or DM.
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