Cognition Labs, a startup developing an artificial-intelligence tool [Devin] for writing code, is in talks with investors to raise funding at a valuation of up to $2 billion, in a test of the investor frenzy around new AI technology.
If completed at that valuation, the funding would increase the startup’s valuation to nearly 6× what it was weeks ago. Silicon Valley venture firms including Founders Fund, already a shareholder in Cognition, are in talks to invest in the current round, people familiar with the matter said.
Cognition only began working on its product last year and doesn’t generate any meaningful revenue. It was valued at $350 million earlier this year in a $21 million deal led by Founders Fund. Peter Thiel, the billionaire investor who started Founders Fund, helped lead its investment in Cognition.
The new fundraising deal hasn’t been finalized, meaning that the terms could change. The company recently has turned down offers at valuations closer to $1 billion—which would still be nearly triple the prior level.
…Cognition, co-founded by Chief Executive Scott Wu, was first conceived as a crypto company but pivoted as AI took over Silicon Valley, launched by a wave of generative-AI applications following the release of ChatGPT. Cognition introduced its AI coding tool, Devin, earlier this month and said it is able to autonomously complete complex coding tasks such as creating custom websites. Devin was trained using AI models [GPT-4] from OpenAI, in which Founders Fund is also an investor.
…In a presentation earlier this month, the venture-capital firm Sequoia Capital estimated that the AI industry spent $50 billion on the Nvidia GPU chips used to train advanced AI models last year, but brought in only $3 billion in revenue.