Why Vibe Coding is On Investor Radars Right Now

One of Europe’s most talked-about tech companies right now is Lovable, the Swedish startup which allows users to build apps and websites via prompts. Achieving USD 50m in annual recurring revenue within six months of launching its platform last year, Lovable has at the time of writing over 130,000 paying customers, of which many are enterprise clients paying the highest subscription tier rate. 

Factoring in the USD 22.5m in funding which the company has also racked up to date, it’s perhaps unsurprising that is co-founder Anton Osika has bluntly said “We’re in a great position where we don’t need cash.” Nevertheless, investors are more than ready to provide it anyway, with it being reliably reported that Lovable is now in talks to raise USD 100m, which would potentially value the company at USD 1.5bn and further bolster its position at the vanguard of “vibe coding”. But what is vibe coding exactly?

Back in 2023, as the tech world was still coming to terms with the asteroid-like impact of generative AI, OpenAI co-founder Andrej Karpathy declared that “the hottest new programming language is English”. 

A new age of democratisation was suddenly afoot. No longer would you need to be fluent in the esoteric language of machines in order to indulge your tech aspirations and craft your very own apps and websites; natural language prompts could do the job instead, lowering the barriers to entrepreneurship to an unprecedented degree.

Cut to 2025, and Karpathy coined the term for this phenomenon in a post on X which has since garnered five million views: “There's a new kind of coding I call ‘vibe coding’, where you fully give in to the vibes, embrace exponentials, and forget that the code even exists… I'm building a project or webapp, but it's not really coding – I just see stuff, say stuff, run stuff, and copy paste stuff, and it mostly works.”

The commercial potential of giving virtually anybody the ability to bring their digital visions to life via the prompt box is one thing, but vibe coding has also transformed how bona fide digital professionals and entrepreneurs operate. Of the latest cohort of startups at Y Combinator, the world’s best-known accelerator, a quarter have codebases which have been almost entirely generated by AI. 

As Y Combinator managing partner Jared Friedman emphasised, “It’s not like we funded a bunch of non-technical founders. Every one of these people is highly technical, completely capable of building their own products from scratch. A year ago, they would have built their product from scratch – but now 95% of it is built by an AI.”

One VC involved in the most recent funding round for Lovable said that he hadn’t “seen this level of user love for a product since we invested in Spotify”. But while the Swedish startup has undoubtedly become the darling of the tech media because of its breakneck pace of growth, it’s only one of several firms which have been reaping the benefits of what amounts to a vibe coding gold rush.

Perhaps the most prominent of all is Anysphere, the Californian company behind Cursor, a platform which allows developers to generate code through natural language prompts. In other words, it’s designed to optimise and automate the workflows of programmers, by contrast with Lovable which caters to everyday non-techies. Earlier this year, Anysphere tripled its valuation to USD 9bn following a USD 900m funding round.

One of Anysphere’s major rivals in this subsector is the coding assistant startup Windsurf, formerly known as Codeium. The company, also based in California and also founded by MIT alumni, raised USD 150m at a USD 1.25bn valuation last August, and is reportedly in talks to be acquired by OpenAI for USD 3bn.

But it’s perhaps Israeli startup Base44 which most strikingly exemplifies the red-hot level of interest being shown in vibe coding companies by both financial buyers and strategic acquirers right now. Within six months of its founding, Base44 – a Lovable-like platform which enables non-coders to AI their way into app and web development – amassed 250,000 users and an acquirer in the form of Wix, which paid USD 80 million for the bootstrapped startup.

It should be noted there are lingering concerns around vibe coding’s potential flaws. Most notably, the risk of security vulnerabilities being inadvertently baked into automatically generated apps and websites, which can then be exploited by threat actors. Earlier this year, it was reported that some intrepid software engineers had easily hacked websites created using Lovable, accessing user data including home addresses and API keys. 

Though significant, such wrinkles will inevitably be ironed out as vibe coding becomes increasingly entrenched and widespread. Lovable has since rolled out security scanning software to check products made through its platform, and we can expect companies to continue to ramp up their security protocols to reassure users and investors alike.  

Whether the startups in this sector will continue to attract very high valuations remains to be seen, and here at Hampleton Partners we’ll continue to monitor the deal data as it comes in. And if you’re a founder or senior decision maker who would like to discuss what the market might offer your company, please reach out to our AI Sector Principal Heiko Garrelfs to get the ball rolling. 

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