Cognition raises $300M at $10B valuation after acquiring Windsurf

Cognition, the AI coding startup behind the Devin assistant, is in talks to raise over $300 million at a $10 billion valuation, according to five sources familiar with the deal. The funding round, backed by Founders Fund and Khosla Ventures, would more than double the company’s $4 billion valuation from March and comes as Cognition announced its acquisition of rival AI coding startup Windsurf.

What you should know: The potential funding represents one of the largest AI startup valuations in the competitive coding assistant market.

• The deal would value Cognition at $10 billion, up from its $4 billion March valuation led by 8VC and Joe Lonsdale’s venture firm (Lonsdale is a cofounder of Palantir, a data analytics company).
• Founders Fund and Khosla Ventures are both participating in the funding discussions, though terms could still change as negotiations continue.
• The timing coincides with explosive growth in the AI coding market, where rival Anysphere’s Cursor tool has reached over $500 million in annualized revenue.

The acquisition backstory: Cognition’s purchase of Windsurf came after a dramatic market shift involving tech giants.

• OpenAI had been rumored for months to be acquiring Windsurf, but the startup’s founders instead joined Google in a $2.4 billion deal earlier this month.
• Two days after the Google announcement, Cognition stepped in to buy the remainder of Windsurf for an undisclosed amount.
• “The new Cognition will work faster than ever,” CEO Scott Wu said in a video announcing the deal alongside Windsurf’s new CEO Jeff Wang.

Competitive landscape: The AI coding market has become increasingly crowded with high-growth startups achieving massive revenue milestones.

• Rival Anysphere, maker of Cursor, has been called one of the fastest-growing startups ever, reaching over $500 million in annualized revenue and a $9.9 billion valuation in June.
• Sweden’s Lovable, focused on “vibe coding” for non-technical users, hit $100 million in annualized revenue in just eight months, beating Cursor to that milestone.
• Tech giants are also embracing AI coding, with Google’s Sundar Pichai and Microsoft’s Satya Nadella saying over 25% of code at their companies is now AI-generated.

Company background: Founded in 2023 by three Olympic-level coding champions, Cognition gained attention with its viral Devin demo but also faced skepticism.

• The company launched Devin last year to significant fanfare, though critics questioned whether the startup was overhyping the AI agent’s capabilities.
• “Software engineering in the real world is just very messy,” Wu told Forbes last year, acknowledging the complexity of real-world applications.
• Cognition has since secured enterprise customers including Ramp (an expense management company), MongoDB (a data platform), and fintech Nubank.

What they’re saying: Company leaders frame their AI assistant as augmenting rather than replacing human developers.

• President Russell Kaplan described wanting Devin to act like “an army of junior engineers” that could automate coding tasks for enterprise customers.
• Wu acknowledged developer concerns, saying “There really is a lot of fear out there. People have a lot of questions about what happens in this new paradigm.”
• The combined vision with Windsurf focuses on redefining “how humans and agents work together,” according to Wu.