Blacksmith, a startup that helps software teams test and validate code, has raised $45 million in a Series B funding round led by Peak XV Partners. The new round values the company at $550 million, a nearly tenfold increase from the $60 million valuation it received when it raised a $10 million Series A less than a year ago. Existing investors GV and Y Combinator also participated, bringing Blacksmith’s total funding to $58.5 million.

The funding comes as AI coding tools are transforming how developers write software. Tools like Cursor, OpenAI’s Codex, and Anthropic’s Claude Code make it possible to generate large amounts of code in seconds. But generating code is only part of the job. That code still needs to be tested, validated, and integrated into existing codebases without breaking anything. According to Blacksmith co-founder and CEO Aditya Jayaprakash, this validation step has become a major bottleneck for engineering teams.

“Validating code is still a bottleneck, and it’s an even bigger bottleneck because people are writing even more,” Jayaprakash said in an exclusive interview.

Blacksmith was founded in 2024 and started as a cloud provider for continuous integration (CI) workloads. In software development, CI is the practice of automatically building and testing code every time a developer makes a change. This helps catch errors early and ensures that new code does not break existing functionality. Blacksmith provides the infrastructure to run those builds and tests quickly and reliably.

Since then, the company has expanded its platform with Codesmith, an AI coding agent that can automatically fix failed code checks. Instead of simply flagging an error and waiting for a developer to address it, Codesmith analyzes the failure, proposes a fix, and applies it. This capability is particularly useful in the era of AI-generated code, where small mistakes can compound quickly.

The company’s customer base has grown rapidly. Blacksmith now serves more than 5,000 customers, including Mercury, Supabase, Clerk, Ashby, and Expensify. That is up from more than 700 customers less than a year ago, according to Jayaprakash. The jump reflects the growing demand for tools that can keep up with the pace of AI-assisted development.

Jayaprakash said Blacksmith reached a $10 million annualized revenue run rate with just 10 employees. The team has since grown to about 30 people, and revenue has increased to “tens of millions of dollars.” He declined to provide a specific updated annual recurring revenue figure, but said some of the company’s largest customers now spend more than $1 million per year on the platform.

The revenue growth is notable for a startup that is only about two years old. It suggests that Blacksmith has found a strong product-market fit and that customers are willing to pay for faster, more reliable code testing. It also highlights the broader trend of companies investing heavily in software development infrastructure as they adopt AI-assisted workflows.

The rise of AI code generation and the need for testing

The software development industry has undergone a dramatic shift in recent years. AI coding assistants have moved from experimental tools to essential parts of the developer workflow. GitHub Copilot, which launched in 2021, showed that AI could help developers autocomplete code. Since then, more advanced tools have emerged that can generate entire functions, modules, or even full applications from natural language prompts.

Cursor, a code editor with deep AI integration, has become particularly popular among developers. OpenAI’s Codex can translate natural language into code and execute tasks across a project. Anthropic’s Claude Code provides similar capabilities with a focus on safety and reliability. These tools have made it possible for a single developer to do the work of a much larger team.

But the speed of code generation has created a new problem. AI models are not perfect. They can produce code with bugs, security vulnerabilities, or subtle logic errors. They can also generate code that conflicts with existing code or does not follow the project’s conventions. Testing and validation are therefore more important than ever.

“People are writing even more code,” Jayaprakash said. “That means there is more code that needs to be verified before it can be shipped.”

Traditional testing tools and CI systems were designed for a world where developers wrote code at a relatively slow pace. With AI, the volume of code changes can be much higher, and CI systems need to handle more builds, more tests, and more concurrent activity. Blacksmith aims to provide the speed and scalability needed for this new environment.

How Blacksmith differentiates itself

Blacksmith competes in a crowded market. Major cloud providers offer their own CI/CD and testing services, including AWS CodePipeline, Azure DevOps, and Google Cloud Build. GitHub Actions, built into the popular GitHub platform, is one of the most widely used CI tools. In addition, Cursor Automations, Codex, and Claude Code have built-in validation capabilities. There are also numerous startups focused on AI-powered testing.

Jayaprakash said Blacksmith competes on two main dimensions: speed and affordability. Running tests in a fast, parallelized environment can significantly reduce the time developers spend waiting for results. This is especially important for teams that rely on short feedback loops to maintain momentum. Blacksmith’s infrastructure is designed to run large numbers of tests concurrently and scale up or down based on demand, which can be more cost-effective than maintaining on-premises CI infrastructure.

The addition of Codesmith gives Blacksmith a unique edge. Rather than just pointing out a failed test, Codesmith can automatically investigate the root cause and implement a fix. This reduces the burden on developers and helps keep the development pipeline moving. It also aligns with the broader trend of AI agents taking on more complex tasks in software development.

The company’s customer roster includes several well-known technology companies. Mercury is a fintech company focused on banking for startups. Supabase is an open-source Firebase alternative. Clerk provides user management and authentication tools. Ashby is a recruiting software provider. Expensify makes expense management software. These companies likely use Blacksmith to test and validate code across their platforms.

Investor confidence and market dynamics

The $45 million Series B round is a strong signal of investor confidence. Peak XV Partners, the lead investor, is one of the largest and most active venture capital firms in Asia. It was formerly the India and Southeast Asia business of Sequoia Capital before spinning out as an independent firm in 2023. Peak XV has backed numerous successful technology companies, and its investment in Blacksmith suggests that it sees significant potential in the AI-powered testing space.

GV, formerly Google Ventures, is the venture capital arm of Alphabet. It focuses on early-stage and growth-stage investments in technology companies. Y Combinator, one of the most prestigious startup accelerators in the world, provided early funding and likely connected Blacksmith with its extensive network of founders and mentors.

The rapid increase in Blacksmith’s valuation from $60 million to $550 million in less than a year reflects the high level of interest in AI infrastructure startups. Investors are betting that the AI coding boom will create a massive need for tools that ensure software quality. Blacksmith is positioning itself as a platform that can handle both the testing and the fix-it phase of the software development lifecycle.

The decision to expand into a broader suite of coding tools indicates that Blacksmith has ambitions beyond testing. Jayaprakash said the company plans to help developers write, validate, and merge software faster. This could include features such as AI-powered code review, automated code generation, or integration with development workflows.

In the short term, Blacksmith will likely use the new funding to scale its engineering team, expand its sales and marketing efforts, and invest in product development. The company has already demonstrated that it can generate meaningful revenue with a small team, so the capital should help it accelerate growth and fend off competition.

The software testing market itself is large and growing. As more companies adopt AI coding tools, the need for robust validation processes will only increase. Blacksmith appears well-positioned to capture a significant share of this market, provided it can continue to innovate and deliver real value to its customers.

Jayaprakash did not disclose a specific updated revenue figure, but the fact that some customers are paying more than $1 million a year suggests that Blacksmith’s services are deeply integrated into the operations of its largest clients. The company’s growth from 700 to 5,000 customers in less than a year is also a testament to the demand for its platform.

The next few months will be critical for Blacksmith as it scales its platform and expands into new areas. With strong investor backing and a growing customer base, the startup is well-funded and well-positioned to become a major player in the AI-powered software development space.

Source: TechCrunch News