AI coding assistant startup Magic closes $320M funding round, rival Codeium rakes in $150M

Magic AI Inc. and Codeium, two startups that use artificial intelligence to make developers more productive, have raised nine-figure funding to support their growth efforts.

Magic revealed today that it recently raised $320 million from a group of prominent investors. Codeium, officially Exafunction Inc., simultaneously announced that it had closed a $150 million funding round at a valuation of $1.25 billion. Both companies use AI to automate repetitive tasks for developers, but they take different approaches to doing so.

Custom models for automatic programming

San Francisco-based Magic develops foundation models optimized specifically for programming tasks. Along with today’s funding announcement, the company described a new, internally developed AI called LTM-2-mini. Magic says it can process prompts with up to 100 million tokens, which equates to about 10 million lines of code.

The ability to download large amounts of code is useful in many development automation scenarios. For example, an AI built to find software vulnerabilities must scan application files containing thousands of lines of code to find risky bugs. A developer search tool may have to search multiple documentation repositories to find the explanation a user wants.

Magic put its LTM-2-mini model to the test by having it perform a series of coding tasks. In one experiment, the AI ​​created a tool that measured the strength of users’ passwords. In another internal test, the LTM-2-mini created a virtual calculator.

The $320 million investment Magic announced today could help the company fund the development of additional AI models. The deal included participation from former Google LLC CEO Eric Schmidt, Atlassian Corp., Jane Street and Sequoia. They were joined by several returning investors, including CapitalG, the growth fund of Google parent Alphabet Inc.

Magic described the funding round alongside a new technical partnership with the search giant. The collaboration will give the startup access to two AI supercomputers hosted on Google Cloud.

The first system, which the companies have dubbed Magic-G4, will be powered by Nvidia Corp.’s H100 GPUs. The second supercomputer is known as Magic-G5 and will be equipped with tens of thousands of the maker’s latest Blackwell B200 chips. The latter processor could apparently enables inference several times faster than H100.

Google describes in detail blog post that the two supercomputers will deliver up to 160 exaflops of performance. One exaflop is one billion billion calculations per second. The world’s fastest AI supercomputer, a system called Aurora, operated by the U.S. Department of Energy, achieved Performance of 10.6 exaflops in May benchmark.

Code editors with chatbots

Codeium, the second startup to announce a funding milestone today, has also given its programming assistant the ability to process large amounts of code. The company says the tool can pull in an app’s entire code repository. When a developer asks a question about a particular program component, the AI ​​can leverage its knowledge of other program modules to generate a more comprehensive answer.

The company sells its software as an extension to popular code-editing apps. Once activated, the extension adds a chatbot to the interface of the editor where it’s installed. Developers can ask the chatbot to explain how a piece of code works, fix any bugs it may contain, and rewrite it to improve hardware performance.

Codeium also offers a number of other AI features. One, Smart Paste, lets developers copy a piece of code and automatically translate it to a new language before pasting it into a new location. Another feature, called Forge, can review changes to a code file for errors before the update is deployed to production.

Business announced today that it has closed a $150 million Series C funding round led by General Catalyst. Kleiner Perkins and Greenoaks also chipped in. Codeium will use the capital to build new features and grow its installed base of over 700,000 active users.

Picture: Reveal