Lovable's $13.3 billion valuation puts AI coding's SaaS challenge in focus

Stockholm-based tech startup Lovable, which lets users build apps, websites, and digital products faster using its AI-powered platform without having any deep coding skills, has raised $400 million in Series C funding at a $13.3 billion valuation, more than double its $6.6 billion valuation just eight months ago in December 2025. The latest round was led by Menlo Ventures and co-led by EQT’s Scaleup Europe Fund, with Balderton Capital, Carmignac, Tencent, World Innovation Lab and Regent also participating.  Since launching in November 2024, users have created more than 60 million projects on the platform, which now sees more than 900 million monthly visits to apps built on it, indicating the speed at which the platform is being adopted.

 

The rise of vibe coding: When anyone can become a software builder

Lovable is part of the growing “vibe coding” trend, where users describe what they want in plain language and AI generates the underlying software. The shift could broaden software development well beyond professional programmers. For example, a product manager could build an internal workflow tool, a sales team could create a customised application, or a founder without a large engineering team could build an early version of a product. Companies could also create smaller, specialised tools instead of buying another SaaS subscription.

 

Lovable is positioning itself for this broader opportunity. It says it has added payments, integrations with Google Workspace, Microsoft 365, Salesforce and Stripe, as well as security and governance features. It also says companies including Adidas, Nvidia and Deutsche Telekom use the platform for software and internal workflows.

Why AI coding is drawing investors

Lovable’s funding comes as investors pour money into a fast-growing AI coding market. Companies like Replit and Cursor have emerged as major players, while OpenAI, Google and Anthropic are also developing AI tools that can write and modify software.

 

The market is now moving beyond basic coding assistants towards AI agents that can plan, build, test and improve applications with less human intervention. According to a report released by research and advisory firm Gartner in May, by 2027, agentic coding will become increasingly common across the software development process, and over 65 per cent of engineering teams using such tools will treat traditional integrated development environments (IDEs) as optional.

 

Stack Overflow’s 2025 Developer Survey found that 84 per cent of respondents were using or planning to use AI tools in development, up from 76 per cent a year earlier, including those who were not professional developers. Among professional developers, 51 per cent said they used AI tools daily. About 70 per cent of developers using AI agents said they saved time on specific tasks, while 69 per cent reported higher productivity.

 

McKinsey’s 2025 State of AI survey found that 71 per cent of respondents were regularly using generative AI in at least one business function, with software engineering among the leading areas of adoption.

 

Hence, the commercial opportunity is straightforward, because if AI makes software faster and cheaper to build, demand for software could expand sharply.

The potential challenge to the SaaS model

So, if companies can use AI to build their own applications, how much software will they continue to buy from Software as a Service (SaaS) providers?

 

Under the SaaS model, companies pay for ready-made tools for functions such as Customer Relationship Management (CRM), Human Resource (HR), analytics and customer support rather than build and maintain them in-house.

 

The UK National Cyber Security Centre (NCSC) has flagged this as a potential challenge to SaaS in its March 24 blog post titled “Vibe check: AI may replace SaaS (but not for a while). Startups are already using “vibe coding” to build alternatives to some non-core SaaS products, while larger companies are experimenting with internal tools that they might previously have bought from software vendors. But the NCSC expects any broader shift to take years rather than months. It said large software companies still have advantages in security, compliance, data, integrations, reliability and customer support that are difficult to replicate through AI-generated applications.

The next phase of AI coding

AI coding is quickly moving from an experiment to a serious software business. But it is still too early to say whether AI-generated applications can replace complex enterprise software. Stack Overflow's adoption data shows that companies may continue buying critical systems such as ERP, CRM and cybersecurity software, while using AI to build smaller, customised tools in-house.