OpenAI in Talks to Acquire Windsurf for $3 Billion, Announcement Expected This Week

The AI coding assistant world might be on the brink of a major shakeup, as Windsurf, the company behind a well-loved coding tool, is reportedly in discussions to be snapped up by OpenAI for a cool $3 billion, according to Bloomberg. If this acquisition goes through, it would thrust OpenAI right into the thick of the competition with other AI coding assistant developers, including Anysphere, the folks behind Cursor. Interestingly, OpenAI had previously backed Cursor through its OpenAI Startup Fund, adding a twist to this potential deal.

The move could cast a shadow over the credibility of the OpenAI Startup Fund, especially since it's one of Cursor's major investors, as pointed out by someone familiar with Cursor's cap table. It's still up in the air whether OpenAI reached out to Cursor about a possible buyout.

Aside from what Bloomberg's sources have shared, there are a few other signs that something big might be brewing between OpenAI and Windsurf. Just a couple of days ago, Windsurf's user base got an email hinting at an upcoming announcement, offering them a chance to lock in their coding editor access for just $10 a month. And if that wasn't enough, OpenAI's Chief Product Officer, Kevin Weil, took to video just yesterday to sing Windsurf's praises.

Windsurf, which used to go by the name Codeium, was reportedly eyeing a fresh round of funding at a $2.85 billion valuation, led by Kleiner Perkins, as TechCrunch reported back in February. They've hit an annualized recurring revenue (ARR) of about $40 million, which, while impressive, is dwarfed by Cursor's reported $200 million ARR. Cursor itself has been in talks to raise capital at a hefty $10 billion valuation, according to last month's Bloomberg report.

Since its inception in 2021, Windsurf, founded by Varun Mohan and his childhood friend Douglas Chen, both MIT graduates, has managed to secure $243 million in funding from investors like Greenoaks Capital and General Catalyst, according to PitchBook data.

Additional reporting by Sarah Perez