Cognition, the startup behind the viral AI coding agent Devin, announced in a blog post on Monday that it has signed a definitive agreement to acquire AI coding startup Windsurf.
The announcement comes just days after Google hired away Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and research leaders in a $2.4 billion reverse-acquihire that left much of the startup’s 250-person team behind. Google’s deal occurred just hours after OpenAI’s $3 billion offer to acquire Windsurf expired, clearing the way for the AI coding startup to explore other options.
The frenzy around Windsurf represents a new peak in the wild race to develop AI coding tools — specifically, the AI-powered integrated development environments (IDEs) that Cursor and Windsurf offer. In recent months, the businesses around AI-powered IDEs have skyrocketed, pushing Cursor’s annualized recurring revenue (ARR) to $500 million. While Windsurf’s business is smaller than Cursor’s, it has achieved impressive growth in the last year, garnering interest from several larger companies.
“The last 72 hours have been the wildest rollercoaster ride of my career,” said Jeff Wang, Windsurf’s former head of business, who was made interim CEO of the startup days ago after Google hired the startup’s leaders, in a post on LinkedIn. “To our new teammates at Cognition: we at Windsurf feel incredibly lucky to be joining a team that shares our vision, our deep commitment to our users, and — most importantly — our values.”
Cognition says it’s acquiring Windsurf’s IP and product, which include its AI-powered IDE, alongside all of the employees who were not hired by Google.
Cognition did not announce the price it acquired Windsurf for; however, the company says Windsurf reached $82 million in ARR, with enterprise ARR doubling quarter-over-quarter. Cognition says Windsurf’s user base reached at least 350 enterprise customers and “hundreds of thousands” of daily active users.
In the near term, Windsurf’s team will continue working on its AI-powered IDE, while Cognition works on its AI coding agent, Devin, the companies said in a press release. Eventually, Cognition says it will integrate Windsurf’s IP and capabilities into its own products.
TechCrunch reported in April that Windsurf’s ARR had reached $100 million at one point. However, Anthropic — which offers some of the most popular AI models for coding tasks — cut Windsurf’s direct access to its Claude AI models in June, with Anthropic co-founder Jared Kaplan attributing the decision to rumors that OpenAI, its largest competitor, was close to acquiring Windsurf. Several Windsurf customers told TechCrunch they switched to other services that offered Claude AI models, such as Cursor, in light of the incident.
Cognition notes in its press release that Windsurf will now have full access to Claude AI models once again.
Over the weekend, The Information reported that Windsurf employees who had joined in the last year did not receive a payout in Google’s billion-dollar reverse-acquihire. That prompted many users on social media to scoff at the deal, which seemed to largely benefit investors and leaders at the startup.
Cognition president Russell Kaplan indicated in a post on X that the Windsurf acquisition truly came together over the weekend, just hours after the Google deal was made public. He noted that the first call was made after 5 p.m. on Friday and that an agreement was signed Monday morning.
Cognition notes in its blog post that 100% of Windsurf employees will participate financially in this deal and have vesting cliffs waived for their work to date.
With the addition of Windsurf’s talent and IP, Cognition may have a supercharged startup to compete with giants in the AI coding space, such as OpenAI, Anthropic, and Cursor. In March, Cognition reportedly held talks to raise hundreds of millions of dollars at a $4 billion valuation. It’s unclear if the round closed, but Cognition may need such a war chest to compete in the AI coding space.
Cognition was one of the first AI startups to launch a fully fledged AI coding agent, Devin, which didn’t just help with tasks, but also promised to automate them completely as if it were a junior software engineer. This was a markedly bold approach compared to Cursor and Windsurf, which offered environments for developers to easily access AI tools. However, early reviews found that Devin made mistakes, perhaps indicating that its AI agent technology was ahead of its time.
That may no longer be the case. In recent months, Cursor and Windsurf have started offering more agentic AI products that are starting to resemble what Cognition offers. In a recent interview, Cursor CEO Michael Truell said he believes AI reasoning models are advancing enough to make coding agents viable and that he expects 20% of coding workflows to be handled by agents by 2026.
Now Cognition has the versatility of offering both AI coding agents and an AI-powered IDE, perhaps enhancing its value proposition. Earlier this week, Cognition also landed a major customer in the Wall Street juggernaut Goldman Sachs.
With the acquisition of Windsurf, it seems Cognition has become a more serious competitor in the AI coding space.
Update: A previous version of this article misstated what Windsurf’s team will be doing at Cognition in the near term. This article was updated on July 14 to note that Windsurf’s team will continue its normal work for now, and will eventually integrate its products into Cognition’s offerings. We regret the error.
