CodeRabbit raises $143M at $6B valuation as AI code review becomes the new observability

Speaker 1: We're setting a new record. We're going.

Speaker 3: It's incredible.

Speaker 1: It's going great.

Speaker 2: I love it. Thank you so much. Thanks

Speaker 3: a lot, man.

Speaker 2: Goodbye. Talk

Speaker 1: to you soon. Congrats.

Speaker 2: Bye. Let me tell you about public.com investing for those who take it seriously. Stocks, options, bonds, crypto, treasuries and more with great customer service. Our next guest is from Code Rabbit. We have Harjot Gill, the CEO here with a big fundraise. We gotta warm up the gong. How you doing? Hey, folks. I'm pretty good. How are you? Welcome. Tell us the news. Welcome

Speaker 1: Well, he's been on the show before,

Speaker 2: haven't you?

Speaker 1: Oh, yeah. Yeah. Have you? But it's been it's been maybe a year and you didn't have an orange background.

Speaker 10: Can you up the volume, please? Sorry.

Speaker 2: Oh, sorry. Yeah. Well, give us the news. Tell us what happened. I wanna hit the gong for you and then we have a bunch of questions about the business.

Speaker 10: Yeah. So we're pretty excited to announce like CDC round of funding. So we just ended up raising $143,000,000 at a $6,000,000,000 valuation. So officially a unicorn now. Yeah. And in a in a short order, like, we started, two and a half years back. So it's been an amazing ride for Pretty the good.

Speaker 2: What's been the biggest

Speaker 1: only $500,000,000 of value a year.

Speaker 2: Not bad. Not bad. Yeah. What's been the biggest driver of growth? What do customers like about CodeRabbit more than anything else? What is what what's the real the real growth vector?

Speaker 10: Yeah. We're pretty much like riding the wave of AI code generation here. So the growth is it's a second order effect of growth of cloud code, codex. Or so as you know, like the biggest use case for generated AI has been code generation. Yeah. And that's what's leading to the bottleneck downstream with code reviews now being a massive, massive bottleneck on a choke point. Yeah. And that's where CodeRevit is right now the market leader, like providing automated validation and building trust in these AI outputs. And that's what is bringing all the growth to our doorsteps.

Speaker 2: Yeah. Unpack a little bit about I was just reading on Hacker News the death of the the the mid tier engineer. You either need a vibe coder who can just, you know, hammer prompts or you need a real experienced expert architect to make any headway. And the messy middle is getting much messier with endless code, huge PRs, huge code reviewing steps that are unmanageable without AI, what is the correct balancing act that a company should be pulling off to actually move quickly, not run up the budget, but still be able to understand their system and get a good result?

Speaker 10: Yeah. It's pure chaos right now. I mean, especially like the recent inflection point we have seen with these agents becoming more and more capable like in the last, I would say, three to six months have been amazing with some of these models like OPUS four five being so capable and being able to run for longer periods of time. And what that means is that the inner loop of coding is now fully automated. Like you can just go from idea to code without even going through like planning process of linear and Jira tickets anymore. Even linear, famously, did a blog post that issue systems are dead, which is a Like now your ideas are just being translated to code directly. Yeah. And it's not just the developers writing code, now you are seeing, as you said, like product managers, even designers who are non technical in terms of coding capabilities are now actually opening pull requests. Mhmm. And on top of that, we are now seeing every company wants to be a coding company. Like now we are seeing Spotify release a coding app.

Speaker 2: Oh, yeah.

Speaker 10: I mean, Linear is writing code, Notion is writing code. Yeah. Datadog wants to write code or Sentry, everyone's writing code. Right? Mhmm. So what that is leading to is like a massive like backlog of the code changes you now have to validate and understand those massive outputs and then ship to production. So the role of human has become more of a reviewer now. So you're every day you're waking up, you're deciding which AI task I take to completion, where I where do I add my taste. Mhmm. And it's a taste thing, it's a judgment thing now, which is scarce now. So that's what we're helping scale. So what CodeRabbit does is it, first of all, fights fire with fire, essentially like you're making cloud code fight with CodeRabbit in a loop. There's lot of loop engineering aspect of it. Making sure your changes are all meeting all the guardrails or the pre merge checks that you have. Yeah. Then after that, we are helping the reviewers also triage and prioritize the work. The nature of planning has now shifted downstream because that's a joke point. Mhmm. And thirdly, we are helping the reviewers also understand the changes. No one's looking at the code, which is the fun part. Like the this is like the biggest inflection I've seen. Like, even I'm not reading the code anymore. Expecting a reviewer to do that is is certainly impossible now. Mhmm. So that what CodeRabbit is also doing is like raising the abstraction of understanding these changes. Like where you're not looking at lines of code but understanding the blast radius and architectural impact of those changes. Mhmm.

Speaker 2: I have one last question, Jordi. Go for it. I'm interested in the opportunity internationally. You're expanding. How big is the opportunity in Europe, in Asia, abroad? How focused are you on it? Is there a unique opportunity because other companies are maybe less serious about international expansion and so you can be more trusted partner faster, accelerate there? Or is it just the logical next step for your company to to expand internationally because there's demand and pull everywhere?

Speaker 10: Right. For us, like, we have always had, like, pull from all segments of the market even globally. Like, when we started, like, initially, we went viral in Japan, was so funny. Right?

Speaker 2: Yeah.

Speaker 10: And even in this round, like we are partnering with a partner in like the one of the VCs who led that round, Atomico is a very large fund out of Europe. Yeah. BMW Ventures invested in that round. BMW has one of our early customers who believed in us. So massive opportunity. I think it's a global opportunity like the developers Yeah. Across the Yeah. Globe are like

Speaker 1: an m three, m two, m four

Speaker 2: I was thinking a wrapped I eight.

Speaker 1: Yeah. Yeah.

Speaker 2: Yeah. Ideally. Your

Speaker 1: orders do go up. Yeah. On the I eight. Yeah.

Speaker 2: Anyway Sorry to interrupt

Speaker 1: but what was what were people most skeptical about with in regard like during the financing process? Obviously, a bunch you know, it sounds like a bunch of customers invested. They don't they they have a good Yeah. Deal for the product. But, you know, space Cursor buys graphite. I'm sure that was an accelerant

Speaker 9: to Sure.

Speaker 1: Your business in some ways. But it also signals that like these companies that are generating code want to Do everything. Do everything.

Speaker 2: Yeah.

Speaker 1: And and so I think you can like I imagine a good argument is like, you know, it's helpful to have a non lab review your code, you know, like a third party be be in that flow. But how did you answer that question?

Speaker 10: No, that's a great question. Mean, this was one of the interesting fundraisers I've done. Like, this is my third startup, by the way. I've, like, seen all kind of fundraisers. Mhmm. This one, you can clearly see, like, there's a lot of, like, anxiety in the market when it comes to the SDLC space. Like, everyone's like just concentrating their capital on a few model labs. Everyone wants to be in Anthropic for instance. And the other dynamic itself is like what does the future of SDLC look like? I mean, is code review step even needed? Right? I mean, people are like completely on defense on what the future of I mean, you know, like gets on the stage and says that you don't need software engineers anymore. Right? So all those like anxiety had been there which we had to like talk to the investors who had to make them understand where this is all going to land, where the stable ground is and code reviews. In fact, like you bring up cursor, it's a great example. Like, what we have seen in the last few years, even the code editors are not future proof. Like, cursor started with tab completion and then they got blindsided by Cloud Code, which was almost like a Yahoo versus kind of a Google movement for them. Right? On the other hand, the code reviews, the guardrails, they never go away. Like you can never have a scenario where you're going to take AI code and ship it to real customers without having any sort of guardrails in place. So the GitHub is becoming like a choke point for a good reason. It's in a lot of distress as you know, but that is kind of a sign of things to come. Like that is the only place where you can actually take a look at the changes and then approve them. Yeah. And this is kind of like an example that I'll give you from a first start I was in the observability space. Had seen kind of the same thing happen where when micro services were taking off, cloud was taking off. There was a lot of chaos. So operators were kind of flying blind. And then Datadog comes in and defines this whole category of observability, right, and became a massively valuable business. Like while AWS, GCP, and they were all growing, Datadog also continued to become a standalone company. Mhmm. Same thing we're seeing with code reviews. Now there's a lot of chaos. Explainability has become a bottleneck. Sure. Just like observability, now you have an explainability problem. Yeah. So in a way like CodeRabbit is now kind of becoming the data dog of this new world. And very interestingly, Datadog is one of the investors in this round as well. Then there's That's awesome. This is analogy here as well. Yeah.

Speaker 2: I love it. Well, congratulations and thank you so much for coming on the show. Awesome progress. Have a great

Speaker 1: rest of rest the team on the milestone.

Speaker 2: We'll talk to you soon. Have a good day.