An artificial intelligence startup, Lovable, has completed a new funding round, achieving a post-money valuation of $13.3 billion, highlighting investors' strong enthusiasm for vibe-coding tools. This Stockholm-based company launched its product in November 2024, and its AI platform enables users to develop software and web applications using everyday, colloquial language.

According to the company and its investors, Lovable raised $400 million in this round. The valuation associated with this transaction has more than doubled from the $6.6 billion figure in December of last year, propelling it into the ranks of Europe's highest-valued startups. The round was co-led by Silicon Valley investment firm Menlo Ventures and the newly established European Scaleup Fund by the European Commission, which is managed by Swedish asset management company EQT and aims to support European startups. Other investors include Balderton Capital, World Innovation Lab, and Tencent.

Where to focus the expansion

Lovable plans to use the funds for business expansion, targeting a 50% increase in staff across its European and American offices to 450 employees this year, while also driving growth in regions like Latin America. The company will also continue to add new security features and enhance product stability. The Lovable platform can develop tools for a variety of business scenarios, covering management needs in departments such as HR, sales, and finance.

Co-founder and CEO Anton Osika stated that some startup founders are already running their entire companies using software built on Lovable. This startup is on track to achieve nearly $600 million in annualized revenue by the end of this month—a common metric for startups based on extrapolating short-term sales to a full year—which represents nearly a threefold increase from the figure disclosed last December. Osika noted that the company was already profitable but is now prioritizing investment in product development and business expansion.

Lovable's client base includes chip manufacturer Nvidia, which uses the platform to build project management software for its team leaders to ensure on-time delivery. Other corporate clients include sportswear brand Adidas, Hearst publishing group, and SaaS provider Zendesk. The trend of companies using AI to build internal applications is intensifying, leading investors to worry that products from commercial software vendors could be eliminated in what is being called a "SaaS pocalypse."

Although Zendesk itself uses Lovable, the customer service software provider does not view it as a threat. Jorge Luthe, Senior Director of Product, stated, "Lovable cannot provide the stability required for cross-channel customer service at a large scale."

Why only 10 ASX 200 shares?

Lovable operates in a highly competitive landscape, with rivals including California-based Replit, which reached a valuation of $9 billion after a funding round in March, tripling its value from six months prior. Menlo Ventures partner Matt Murphy commented that after this investment, Lovable will become Menlo's largest single investment since Anthropic, "which is enough proof of how bullish we are on Lovable's prospects."

For EQT-managed European Scaleup Fund, this investment is an early test of its ability to support local startups while convincing them not to relocate to the U.S. as they grow. EQT partner Victor Englesson noted that if startups like Lovable ultimately rely primarily on American capital, "the incentive to move headquarters and go public in the U.S. will be significantly strengthened," potentially harming the development of European frontier technology industries.