Software developers love using AI. So much so that they’re emptying their wallets on AI coding software like Cursor and Anthropic’s Claude Code. But the tools’ ever-evolving pricing plans are driving them nuts.
Earlier this month, coders using Cursor were vexed by sudden and unexpected charges after the company changed its $20-per-month subscription plan to cap previously unlimited model usage at $20, with additional fees incurred for anything more. Others complained about maxing out rate limits before being able to enter more than three prompts, calling Cursor’s pricing switch “shady” and “vague.” (CEO Michael Truell later apologized for how the pricing changes were rolled out). When Anthropic silently added additional weekly usage limits to Claude Code, power users were left befuddled, claiming the company’s calculation of usage was inaccurate.
Programmers frustrated by the obscure pricing plans of the AI coding software they use are a fast-growing market, said Saoud Rizwan, CEO and founder of open source AI coding tool Cline. Many end up locked in $200 monthly subscriptions, making it difficult for them to afford testing new models from other AI providers. In October 2024, Rizwan launched Cline hoping to bring more transparency to AI service billing and help developers afford access to a variety of AI models.
Cline plugs into code editors like VSCode and Cursor and provides developers access to AI models of their choice without worrying about arbitrary limits. Developers pay AI model providers like Anthropic, Google or OpenAI directly for what’s called “inference” or the cost of running AI models, and Cline shows them a full breakdown of the cost of each request.
Because it is open source, users can see how Cline works and how it is built, ensuring they understand exactly how and why they are being billed. “They’re able to see what’s happening under the hood, unlike other AI coding agents which are closed source,” said Nick Baumann, Cline’s product marketing lead.
The system itself is similar to other AI coding tools; Developers prompt Cline in plain English; They describe the code needed and the AI model to be used, and the system reads filed, analyzes codebases and creates it. The value-add is that developers know exactly what they’re paying for and can choose whichever model they want for specific coding tasks.
Cline has racked up 2.7 million installs since its launch in October. The company announced, Thursday, it has raised $27 million in a Series A funding round led by Emergence with participation from Pace Capital and 1984 Ventures, valuing it at $110 million. Rizwan plans to use the fresh capital to commercialize the company’s open source product by adding paid features for enterprise customers like Samsung and German software company SAP who have already started using it.
Cline is up against companies like Cognition, which Forbes reported is in talks to raise more than $300 million at a $10 billion valuation and Cursor, which claims it has more than $500 million in annualized revenue from subscriptions.
Rizwan, 28, said his startup’s biggest differentiator in the fiercely competitive AI coding space is its business model. Companies like Cursor make money through heavily subsidized $20 monthly subscriptions, managing high costs by routing queries to cheaper AI models, he claims. Cline is “sitting that game out altogether,” he said. “We capture zero margin on AI usage. We’re purely just directing the inference.”
That tactic helped convince Emergence partner Yaz El-Baba to lead the round. El-Baba told Forbes that because Cline doesn’t make any money on inference it has no incentive to degrade the quality of its product.
“What other players have done is raise hundreds of millions of dollars and try to subsidize their way to ubiquity so that they become the tool of choice for developers. And the way that they’ve chosen to do that is by bundling inference into a subscription price that is far lower than the actual cost to provide that service,” he said. “It’s just an absolutely unsustainable business model.” But with Cline users know what they’re paying for and can choose which models to use and where to send sensitive enterprise data like proprietary code.
Cline started off as a side project for Anthropic’s “Build with Claude” hackathon in June 2024. Although Rizwan lost the hackathon, people saw promise in the AI coding agent he built and it started to gain popularity online. In November, he raised $5 million in seed funding and moved from Indiana to San Francisco to build the startup. “I realized I opened up this can of worms,” he said.
Now as its AI coding rivals reckon with the realities of pricing their AI coding software, Cline has found a new opening to sell its product to large enterprises, Rizwan said. And he’s betting that open source is the way to go. “Cline is open source, so you can kind of peek into the guts of the harness and kind of see how the product is interacting with the model, which is incredibly important for having control over price transparency.”
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