Relace raises $23M in funding led by Andreessen Horowitz to build tools for AI coding agents

A new kind of developer tool is taking shape in San Francisco, and it isn’t built for humans. It’s built for AI. Relace, a young AI startup founded just a few months ago, has raised $23 million in Series A funding led by Andreessen Horowitz to build specialized infrastructure for AI coding agents, the company announced Wednesday.

The round highlights a shift in the software world: code is increasingly being generated by machines, and those machines need their own tools to operate at scale.

“At Relace, we’re building the models and infrastructure to power software on demand. That means small, specialized language models on optimized infrastructure that make code agents faster and production ready out-of-the-box. To accelerate this mission, we’ve raised a $23M Series A led by Andreessen Horowitz (a16z), with participation from Matrix Partners and Y Combinator,” Relace said in a blog post.

Relace is stepping into this gap with a simple but ambitious mission — give AI coding agents the same kind of finely tuned development environment that human engineers have enjoyed for decades. As models from companies like OpenAI and Anthropic get better at generating code, the bottleneck has moved from creation to execution. “For decades, code was written by humans. Now, it’s generated by agents. The bottleneck has moved: from writing code to running it,” a16z wrote in its announcement on X.

With $23M in Funding, AI Startup Relace Aims to Power Production-Ready tools for AI coding Agents

The company is led by cofounders Preston Zhou and Eitan Borgnia. Zhou, who serves as CEO, comes from an AI research and engineering background, while Borgnia, the CTO, brings deep experience in systems programming and infrastructure. Their small Bay Area team of eight has already made a name for itself by focusing on low-latency, cost-efficient models purpose-built for agentic workflows. Zhou confirmed the funding in an interview with The Information, explaining how their approach addresses pain points in current AI coding pipelines.

Building the toolkit for agent developers

Relace’s product line is aimed squarely at AI agents, not human programmers. It includes three core model types:

• Apply models that integrate generated code into live projects without human cleanup.

• Embedding models that let agents search and retrieve relevant code snippets from massive codebases almost instantly.

• Reranking models that filter multiple AI outputs to select the most accurate one, cutting down on hallucinations.

These models plug into a range of foundation models, from general-purpose LLMs to specialized code generators. Beyond the models themselves, Relace is working on infrastructure for versioning, deployment, and codebase state management that allows agents to operate more autonomously. “Modern coding agents rely on many models… Relace hits that sweet spot: lower latency, lower cost, and the same or better quality,” wrote a16z partner Yoko Sakao in a thread on X.

Traditional developer tools were built for humans using GUIs. Agentic systems require something different: APIs and frameworks that let machines slot directly into production environments. Relace is betting that its platform will become a foundational layer for this shift.

Perfect timing

AI-driven coding has exploded in 2025. Tools like GitHub Copilot and Cursor have evolved from autocomplete assistants into autonomous developers capable of shipping features end-to-end. That surge has exposed the weak links in current infrastructure: inconsistent outputs, expensive compute cycles, and brittle integrations. Relace is planting itself right at that intersection of AI and engineering, where the next generation of development workflows is being built.

For Andreessen Horowitz, this is part of a bigger push into AI infrastructure. The firm has poured billions into the sector this year alone, including a $20 billion megafund aimed at strengthening the U.S. AI ecosystem. “AI Software Development is the #1 market for AI,” tweeted a16z’s Guido Appenzeller. “AI coding agents need tools and Relace makes the best ones.”

What’s next

Relace plans to use the new capital to grow its engineering team, expand its suite of models, and bring on early enterprise customers, which could include AI labs and large tech companies experimenting with agent workflows. The startup is already in production with companies like Lovable, Magic Patterns, Codebuff, Create, and Tempo Labs.

This isn’t just another funding announcement. It signals where the momentum is heading. Investors are moving from hyping models to backing the infrastructure that makes those models truly useful. If Relace succeeds, agent-native development could shift from a niche experiment to the default way software is built.