In an unexpected turn of events, artificial intelligence startup Cognition announced this week that it is acquiring AI coding startup Windsurf.

The deal comes just days after news broke that OpenAI’s planned $3 billion buy of Windsurf had fallen apart. Google then announced the same day that it had hired Varun Mohan, Windsurf’s CEO and co-founder, and that it was paying $2.4 billion to license Windsurf’s technology and for compensation. A number of other senior staff would reportedly be going to also work for Google.

Competition for talent in the AI space is heated, and the news was considered to be a big blow for OpenAI.

For its part, Cognition says it is buying Windsurf’s intellectual property, product, trademark, brand and “strong business.” It did not reveal its purchase price. As part of the deal, the employees who were not hired by Google will be going to work for Cognition.

San Francisco-based Cognition has built an AI coding agent called Devin that supposedly helps engineers build software faster. Founded in late 2023, the startup has raised nearly $200 million in funding from investors such as Khosla Ventures, Pear VC, Founders Fund, South Park Commons, and 8VC 1, per Crunchbase data.

Also backed by Founders Fund, Windsurf has raised over $240 million since its 2021 inception. Other investors include General Catalyst, Kleiner Perkins and Greenoaks. According to Cognition’s announcement, Windsurf has $82 million in annual recurring revenue “with enterprise ARR doubling quarter-over-quarter.” Its user base includes over 350 enterprise customers and “hundreds of thousands” of daily active users.

Related Crunchbase Pro query:

Related reading:

Illustration: Dom Guzman