Lovable, a Swedish AI startup, is in discussions with US investors to secure at least US$100 million in funding.

This investment could value the company at US$1.5 billion or more, according to sources familiar with the situation, although talks are still in the early stages and terms may change.

Founded in 2023, Lovable develops AI-powered tools that allow users without coding expertise to create apps and websites.

The company reports over US$61 million in annual recurring revenue and serves 130,000 paying customers. Subscription prices start at US$25 for individual users and are higher for enterprise accounts, which contribute 20% of total sales.

Lovable has raised US$22.5 million from investors such as Creandum, Antler, and Adam D’Angelo, a board member of OpenAI.

CEO Anton Osika did not comment on the current funding round but said that the company is in a strong financial position.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ “Vibe coding” represents the new frontier in tech fundraising

The rise of AI coding assistants has triggered significant investment levels, with Lovable’s potential $100M raise following Anysphere’s notable $900M funding round at a $9.9B valuation 1.

This sector is attracting substantial capital, with 48% of all venture capital investments in 2024 going to AI-powered companies, marking the third consecutive quarter of growth in this segment 2.

The strong investor interest persists despite many of these startups relying on foundation models developed by larger companies, raising questions about long-term defensibility and profitability 3.

Y Combinator reports approximately 25% of its portfolio companies now use AI to write 95% of their code, signaling a fundamental shift in how software is built 4.

This represents a departure from traditional software development funding patterns, with AI coding companies achieving valuations that often exceed those of typical enterprise software startups at similar revenue stages.

2️⃣ Growth metrics for AI coding startups defy typical SaaS benchmarks

Lovable’s reported $61 million ARR achieved within roughly a year of founding represents an extraordinary growth trajectory compared to traditional software companies.

The median revenue for Series A companies across industries is just $2.5 million according to market data, making Lovable’s performance significantly higher than the typical benchmark 2.

Leading vibe coding companies are reporting revenue growth of over $1 million per week, with Anysphere reaching $100 million ARR in just 21 months 5.

This growth pattern has shifted investment expectations. The average deal size for tech investments increased 40% from 2023 to 2024, while the number of monthly deals dropped by half 6.

Such rapid revenue scaling helps explain why investors are willing to accept the $1.5 billion+ valuation for a company founded just last year, despite ongoing concerns about product security.

3️⃣ Security concerns remain a critical challenge for AI-generated code

Lovable’s previously reported security vulnerabilities highlight a persistent challenge in the AI coding industry, where automatically generated code may contain unexpected flaws.

Security researchers have identified multiple vulnerability types in AI systems, including data poisoning and adversarial examples, which can compromise AI-generated outputs 7.

NIST researchers emphasize there is currently no foolproof defense against these vulnerabilities, requiring continuous vigilance from developers 8.

The CEO’s claim that AI-generated apps may eventually prove more secure than human-coded ones remains speculative, as comprehensive data comparing security metrics between AI and human-developed code is still emerging.

Industry experts caution that while vibe coding accelerates development, it potentially creates challenges in code maintainability and debugging, particularly important considerations for enterprise customers who now represent 20% of Lovable’s business 9.

……