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Podcast: The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

Published: 2026-03-09

Duration: 1 hr 3 min

Summary

In this episode, Miles Clements shares insights on the evolving landscape of AI investments, emphasizing the importance of understanding both time to value and the durability of that value in assessing companies. He also tackles misconceptions around Cursor's market position and highlights the expansive nature of the AI sector.

What Happened

Miles Clements, a partner at Accel, joins Harry Stebbings for a candid discussion on the intricacies of growth investing in today's AI-driven market. They dive into the significance of evaluating a company's time to value and the sustainability of that value, especially in sectors like legal and accounting AI, where deployment cycles may be longer but yield transformative results once adopted. Clements notes how certain coding companies, like Cursor, have quick time to value but might lack long-term durability, illustrating the delicate balance investors must navigate.

Throughout the conversation, Clements addresses the prevailing narrative that 'Cursor is dead,' pointing out that while competitive products like Cloud Code are gaining traction, it doesn't necessarily mean Cursor is failing. He argues that the market for AI tools is expanding, allowing multiple players to thrive simultaneously. Clements stresses that the success of coding tools should be viewed within the broader context of market growth, which is generating new user cohorts and driving overall innovation in AI.

Key Insights

Key Questions Answered

How do you determine true value in AI investments?

Miles Clements emphasizes the importance of understanding a company's time to value and the durability of that value when evaluating AI investments. He suggests that while some companies may show quick returns, like coding tools that can be utilized immediately, their long-term sustainability is critical to assess. This dual focus allows investors to make more informed decisions in a rapidly changing market.

What is the current status of Cursor in the AI market?

Clements addresses the criticism surrounding Cursor, stating that despite claims of its decline, the company is actually seeing significant growth, hitting $2 billion in ARR. He argues that the AI market is expanding, and the success of competitors like Cloud Code doesn’t inherently diminish Cursor's position, as many new users are being introduced to the coding landscape.

What factors contribute to the success of AI tools like Cloud Code?

Clements attributes Cloud Code's success to its ability to capture user interest and leverage advancements in underlying models, particularly Opus 4.5 and 4.6. He believes that the transformative value these tools provide to users, by making software development more accessible, plays a crucial role in their rapid growth and adoption.

What is the significance of market expansion in AI?

Clements points out that the AI market is not a zero-sum game; rather, it is expanding, allowing multiple companies to thrive. He believes that this growth is a result of new user cohorts entering the software development space, which is fostering innovation and creativity across various AI applications.

How should investors approach valuation in a volatile market?

Miles Clements suggests that valuing companies in today’s market requires a blend of both scientific and artistic approaches. Investors must have a firm grasp on financial metrics while also being willing to break conventional rules when necessary. This strategy involves focusing on incremental gains instead of solely chasing home runs.