Cognition AI to buy Windsurf, doubling down on AI-driven coding

July 14 (Reuters) - Artificial intelligence startup Cognition AI on Monday agreed to acquire Windsurf, an integrated development environment platform, strengthening its position in the rapidly evolving enterprise software market.

The deal follows Google's $2.4 billion deal with Windsurf last week aimed at acquiring top talent and securing licensing rights to its technology.

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The deal with Google marks a win for Windsurf's backers, who have raised $243 million from investors including Kleiner Perkins, Greenoaks, and General Catalyst, and was last valued at $1.25 billion one year ago, according to PitchBook.

The deal with Cognition covers Windsurf's intellectual property, product line, brand, and business operations, as well as its highly regarded engineering, product, and go-to-market teams.

While the financial terms of the deal were not disclosed, Windsurf brings with it $82 million in annual recurring revenue and a customer base of more than 350 enterprises.

"Among all the teams in the AI space, Cognition was literally the one we have respected the most, and they are a perfect fit to bring Windsurf to the next phase," Jeff Wang, Windsurf's interim chief executive officer, said in an email to employees.

In the immediate term, Windsurf will continue to operate independently, with Cognition pledging significant investment to integrate Windsurf's technology and unique assets into its own product suite, including its flagship autonomous agent, Devin.

Earlier, Windsurf had been engaged in months-long discussions with OpenAI regarding a potential acquisition that could have valued the company at $3 billion, sources familiar with the matter told Reuters in June.

Reporting by Kritika Lamba in Bengaluru; Editing by Mohammed Safi Shamsi

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