Cursor Acquires AI Startup Koala to Strengthen Enterprise Competition Against GitHub Copilot

The startup behind the popular AI coding app Cursor, Anysphere, is making a strategic move to strengthen its competitive position against Microsoft’s GitHub Copilot by acquiring top talent from other AI enterprise startups. In a recent deal, Cursor acquired AI-powered customer relationship management (CRM) startup Koala, primarily to gain several of its top engineers for a dedicated enterprise-readiness team. However, Cursor does not plan to integrate Koala’s core CRM product, and Koala will cease operations in September. Koala, which raised a $15 million Series A round in February, was founded by former Meta employees and advised by influential figures like Jack Altman. Despite initial promise and notable clients such as Vercel, Statsig, and Retool, Koala struggled to maintain momentum. This acquisition underscores a trend in the AI startup landscape of 2025, where rapidly growing companies like Cursor are leveraging the skills and expertise of less successful startups to enhance their offerings. Anysphere's broader acquisition and hiring strategy includes bringing in Travis McPeak, the former CEO of cybersecurity startup Resourcely, to lead its security teams. These moves reflect Cursor’s ambition to transform from a personal developer tool to a comprehensive enterprise platform. Currently, GitHub Copilot leads the market, working seamlessly with IDEs like VS Code and JetBrains and benefiting from Microsoft’s extensive enterprise relationships and support infrastructure. Cursor, a standalone AI-powered IDE, has made significant strides in enterprise adoption. According to Anysphere, the company achieved $500 million in annual recurring revenue (ARR) in June and now collaborates with over half of the Fortune 500 companies, including NVIDIA, Uber, and Adobe. Revenue has continued to grow, with an increasing portion coming from enterprise deals. Cursor's sales and marketing teams have expanded significantly, with dozens of employees focused on securing contracts with major corporations. However, Cursor faces strong competition from other players. Anthropic, a key partner to Anysphere, has seen rapid growth with its Claude Code product, which uses the same AI models that power Cursor’s tools. Additionally, Google has acquired the leadership team of Windsurf, a direct competitor to Cursor, while Cognition, the developer of AI coding agent Devin, has taken on the rest of Windsurf’s team. Despite these varied products, employers often see them as similar solutions aimed at enhancing software engineer productivity through automation. The urgency in the AI coding market is palpable, with multiple tech giants and startups racing to scale their enterprise operations. While product quality remains important, the ability to scale swiftly and secure large enterprise clients is becoming a decisive factor. Cursor’s aggressive acquisition strategy is a clear indication of its intent to solidify its position alongside Microsoft, Google, and Anthropic. If successful, these moves could propel Cursor to become a leading AI coding tool for businesses, or it risks falling behind in a rapidly consolidating market. Industry experts suggest that the success of Cursor's strategy hinges on its ability to integrate and leverage the acquired talent effectively. While Microsoft and Google have the advantage of established enterprise networks, Cursor’s focus on building a robust go-to-market approach and securing high-profile enterprise clients is a smart move. The next few months will be crucial as Cursor continues to expand its enterprise offerings and fortify its position in the competitive AI coding landscape. Anysphere, the parent company of Cursor, has emerged as a formidable player in the AI coding space, driven by its innovative approach and strategic acquisitions. The company’s rapid growth and enterprise traction highlight its potential to become a major force in the tech industry, mirroring the trajectory of larger companies like Meta and Google as they navigate the evolving AI landscape. However, the intense competition and the need for continuous improvement and innovation mean that Anysphere must stay agile and responsive to market demands to maintain its edge.