AI Coding Startup Zed Raises $32 Million to Expand Beyond IDEs with DeltaDB

Zed, an open source AI coding tool, has raised $32 million in a series B funding round led by Sequoia Capital, with participation from existing investors. The latest round brings its total funding to more than $42 million.

Zed began building its editor a few years ago by building what it calls the world’s fastest editor. Now, with fresh capital, the company is pushing into a larger vision, transforming how software teams and AI agents collaborate.

At the centre of this vision is DeltaDB, a new form of operation-based version control designed to capture code changes at the level of individual edits rather than only commits.

According to Zed, today’s tools constrain collaboration because conversations about code are tied to static snapshots, pull requests, or scattered chat logs. These references often go stale, leaving discussions disconnected from the latest version of the code. The company argues that this model is even more limiting when working with AI agents, where rapid, back-and-forth iteration is essential.

DeltaDB, built on Conflict-Free Replicated Data Types (CRDTs), records and synchronises changes incrementally in real time while remaining interoperable with Git. This enables developers to link conversations and edits directly to any character or line of code, preserving context as projects evolve. 

The company envisions a system where every human and AI interaction, clarification, pivot, correction remains permanently tied to the codebase. They also plan to release DeltaDB as open source with an optional paid service, following the same model as its IDE.

Upgrades like these to the platform could help Zed stand out from the VS Code forks out there. It remains to be seen how the planned improvements pan out.