Codeium, a Silicon Valley-based AI-powered coding startup, is raising a new round of funding at a staggering $2.85 billion valuation, including fresh capital, according to two sources with knowledge of the deal. This significant milestone comes just six months after the company announced a $150 million Series C funding round at a $1.25 billion post-money valuation.

The new round is being led by returning investor Kleiner Perkins, which also participated in Codeium's previous funding round. Although the exact dollar amount of the new funding remains undisclosed, the valuation increase underscores the company's rapid growth and promising prospects in the AI code editing space.

Codeium's implied valuation of roughly 95 times its annualized recurring revenue (ARR) of $30 million is notably higher than that of its competitors. For instance, Anysphere, the maker of AI-powered coding assistant Cursor, recently announced a funding round at a $2.5 billion valuation, with an implied valuation of 25 times its reported $100 million in revenue.

The company's ability to secure such a rich valuation is attributed to its unique approach of targeting companies rather than individual developers. Codeium's free tier has been adopted by over 1,000 enterprise customers, including prominent names like Anduril, Zillow, and Dell. This strategic focus has enabled the company to differentiate itself from competitors like Poolside, Magic, Microsoft's GitHub Copilot, and others.

In addition to its business model, Codeium has been investing in innovative technologies, such as its Windsurfer Editor, which can write some code without human involvement, leveraging agentic AI or "agent mode." This feature, also offered by competitors like Cursor, has the potential to revolutionize the coding landscape.

Founded in 2021 by Varun Mohan and Douglas Chen, Codeium has made significant strides in a short period. Mohan, a former tech lead at Nuro, and Chen, who previously worked at Meta, brought their expertise in software development and AI to create a platform that streamlines coding processes for enterprises.

The latest funding round solidifies Codeium's position in the competitive AI code editing space, where companies are vying for dominance. As the market continues to evolve, it will be interesting to see how Codeium leverages its newfound capital to further innovate and expand its offerings.

With its impressive valuation and growing customer base, Codeium is poised to make a significant impact on the tech industry. As the company continues to push the boundaries of AI-powered coding, it will be exciting to see how its innovations shape the future of software development.