AI Startup Magic Raises $320 Million and Partners with Google Cloud
Magic, an AI startup specializing in creating models for code generation and software development automation, has successfully raised $320 million from a group of investors that includes former Google CEO Eric Schmidt. This significant funding round also saw contributions from Alphabet’s CapitalG, Atlassian, Elad Gil, Jane Street, Nat Friedman, Daniel Gross, Sequoia, and others, bringing the company’s total raised capital to $465 million.
Impressive Fundraising and Valuation
In July, Reuters reported that Magic was aiming to raise over $200 million at a $1.5 billion valuation. The recently concluded funding round exceeded these expectations, although the current valuation of the startup remains undisclosed. Earlier in February, Magic was valued at $500 million.
Partnership with Google Cloud
Alongside the funding news, Magic announced a strategic partnership with Google Cloud to develop two AI supercomputers. The first, Magic-G4, will utilize Nvidia H100 GPUs, while the second, Magic G5, will be built with Nvidia’s upcoming Blackwell chips. These supercomputers are designed to scale to tens of thousands of GPUs, achieving computational speeds of up to 160 exaflops, which significantly enhances the efficiency of AI model training and inference.
Magic co-founder and CEO Eric Steinberger expressed enthusiasm about the partnership, stating, “We are excited to partner with Google and Nvidia to build our next-gen AI supercomputer on Google Cloud. Nvidia’s [Blackwell] system will greatly improve inference and training efficiency for our models, and Google Cloud offers us the fastest timeline to scale, and a rich ecosystem of cloud services.”
The Founders and Their Vision
Magic was co-founded in 2022 by Eric Steinberger and Sebastian De Ro. Steinberger, inspired by AI’s potential at a young age, pursued computer science at Cambridge and later worked at Meta as an AI researcher. De Ro, previously the CTO at FireStart, met Steinberger through ClimateScience.org, an environmental volunteer organization co-created by Steinberger.
Innovative AI Tools
Magic is developing AI-driven tools designed to assist software engineers in writing, reviewing, debugging, and planning code changes. These tools act as an automated pair programmer, continuously learning about the context of various coding projects. One of Magic’s key innovations is its models’ ultra-long context windows, known as the Long-term Memory Network (LTM).
The latest model, LTM-2-mini, features a 100 million-token context window, significantly larger than any commercial model to date. This capability allows the model to handle extensive codebases effectively, preventing it from losing context or veering off-topic.
Future Prospects and Market Potential
Despite currently having a small team and no revenue, Magic is targeting a market projected to be worth $27.17 billion by 2032. The company aims to expand its cybersecurity, engineering, research, and system engineering teams, with ambitions extending beyond routine software development tasks towards achieving Artificial General Intelligence (AGI).
The enthusiasm for AI-powered coding tools is evident, with Microsoft reporting over 1.3 million paying users for GitHub Copilot, and Magic is well-positioned to become a significant player in this burgeoning field.
