Cursor Acquires AI Startup Koala to Bolster Enterprise Offerings

Cursor, the AI coding app, has acquired enterprise startup Koala to bolster its competition with GitHub Copilot. Koala's top engineers will join Cursor to build an enterprise-readiness team. The entire Koala team will not be joining, and Cursor won't integrate Koala's CRM product. Koala will shut down in September after raising a $15 million Series A led by CRV. The acquisition highlights the disparity between juggernaut AI tools and struggling B2B startups.

Cursor, the AI coding app, has made a strategic acquisition by taking over enterprise startup Koala. The acquisition aims to bolster Cursor's competition with Microsoft’s GitHub Copilot and win over businesses looking to enhance their employees' productivity with AI coding tools. This move underscores the growing disparity between juggernaut AI tools and struggling B2B startups.

Acquisition Details
The acquisition, announced on July 18, 2025, involves Cursor maker Anysphere acquiring Koala, a CRM startup. As part of the deal, several of Koala’s top engineers will join Anysphere to build an enterprise-readiness team. However, the entire Koala team will not be joining Anysphere, and Cursor does not plan to integrate the startup’s core CRM product [1].

Koala's Background
Koala, which was founded in 2021, had raised a $15 million Series A led by CRV. The company had worked with clients such as Vercel, Statsig, and Retool. Koala plans to shut down in September, as announced in a blog post published on July 18, 2025 [1].

Strategic Implications
Cursor's acquisition of Koala highlights a trend in the AI startup ecosystem. On one hand, there are giants like Cursor that are rapidly expanding and encroaching on the territory of established players such as Microsoft and Anthropic. On the other hand, there are startups like Koala that have promising beginnings but struggle to gain traction and ultimately fail.

Cursor is capitalizing on this disparity by leveraging middling AI startups to build out its own enterprise offerings. This strategy is similar to Big Tech’s reverse-acquihires, where companies hire top talent from smaller startups to quickly build new business segments [1].

Cursor's Enterprise Push
Cursor aims to evolve from a personal developer tool used by engineers to an enterprise-wide platform that companies pay large contracts to access. The company has been actively building out its go-to-market and sales team, visiting Fortune 500 companies to demonstrate its AI tools [1].

Cursor's enterprise push seems to be gaining traction. The company reported $500 million in ARR in June and now works with more than half of the Fortune 500, including NVIDIA, Uber, and Adobe [1].

Competitive Landscape
Cursor faces stiff competition from established players and other startups. Microsoft's GitHub Copilot has a strong presence in the enterprise market due to its long-standing relationships with legacy companies and its large sales, security, and support teams. Google recently acquired the leadership team of Windsurf, a major competitor to Cursor in the AI-powered IDE space. Cognition, the maker of the AI coding agent Devin, also acquired the rest of Windsurf’s team [2].

Future Prospects
The acquisition of Koala’s talent is a significant move for Cursor. The company hopes that Koala’s engineers will help it evolve into an enterprise-wide platform. However, Cursor must also navigate a competitive landscape where the race isn't just about building the best AI coding tool but about scaling operations quickly while the market is still up for grabs.

References
[1] https://techcrunch.com/2025/07/18/cursor-snaps-up-enterprise-startup-koala-in-challenge-to-github-copilot/
[2] https://www.ainvest.com/news/cognition-ai-windsurf-acquisition-bold-move-future-ai-coding-2507/