Perplexity valued at $20B builds coding tool to rival Cursor

Perplexity AI is building a coding tool that manages software projects from start to finish, entering a market where Cursor and Anthropic's Claude Code already compete for developer dollars.

The San Francisco-based search startup, valued at $20 billion in its most recent funding round, has internally deployed a tool codenamed Teammate that engineers have been using since May, according to a person familiar with the matter and internal screenshots reviewed by Business Insider.

"It's built for long-horizon engineering work: owning projects, investigating issues, and monitoring services," an internal announcement reads. The tool is model-agnostic, meaning it does not rely on any single AI model, the person said.

Perplexity's entry intensifies a market that has become one of the most competitive in AI. Cursor, the AI coding assistant from startup Anysphere, and Anthropic's Claude Code have both attracted millions of developers and billions in venture funding. OpenAI also offers a coding product through its ChatGPT platform. Perplexity, which began as a search engine competing with Google, is now expanding into a category where the buyer is the developer — a notoriously demanding audience that judges products by whether code compiles, not by marketing claims.

Teammate's capabilities and internal mandate

Perplexity engineers have used Teammate to find bugs in internal systems, screenshots show. The tool is designed to oversee entire software projects rather than generate snippets of code, positioning it closer to Claude Code's agentic approach than to simpler autocomplete tools.

Chief Technology Officer Denis Yarats has pushed the engineering team to embrace AI. Weeks before Teammate launched internally, he wrote in messages viewed by Business Insider that by the end of the year or sooner, software engineers should "stop looking at code" and rely on AI-generated output. He dismissed concerns about poor-quality AI code, arguing that "slop is not going to be a thing" as long as generated code passes quality checks.

The internal push reflects a broader industry shift. A March 2026 survey by the Small Business and Entrepreneurship Council found that 82 percent of small business employers have invested in AI tools, with the average business running five of them. Among those using AI, 91 percent reported measurable revenue increases, according to a Goldman Sachs survey.

What the coding tool market looks like now

The AI coding market has become a battleground for the industry's most valuable companies. Cursor, backed by investors including Andreessen Horowitz, has become the default choice for many professional developers. Anthropic's Claude Code, released earlier this year, offers similar capabilities with a focus on longer, multi-step tasks. OpenAI's ChatGPT can generate and debug code but lacks the project-level orchestration that Teammate promises.

Perplexity's advantage may be its existing user base. The company's search product already handles code-related queries, and a coding tool could deepen engagement with technical users who currently use Perplexity for research. The company has not disclosed a public launch date for Teammate, and a spokesperson declined to comment on the product's timeline.

For investors, the expansion signals Perplexity's ambition to become a broader AI platform rather than a single-product search company. The coding tool market represents a direct revenue opportunity: Cursor charges $20 per month for individual users and higher rates for teams, while Claude Code is bundled into Anthropic's enterprise plans. Perplexity has not disclosed pricing for Teammate.

This article is for informational purposes only and does not constitute investment advice.