If the reports from the Wall Street Journal are true, the $500m round led by Peter Thiel’s Founders Fund would bring Cognition’s valuation to nearly $10bn.
Cognition just last month bought up the remaining assets and team at fellow coding AI start-up Windsurf, after the latter’s founders and other team members had jumped ship to Google in a deal valued at $2.4bn which included licensing of Windsurf’s technology.
While Cognition did not disclose the value of the acquisition, co-founder and CEO Scott Wu said that the company was purchasing Windsurf’s talent, products, intellectual property and its clientele of more than 350 enterprises.
Founded in 2023, Cognition’s flagship product is an AI coding agent, named Devin, designed to speed up software development. In March, Bloomberg reported that the start-up hit a near $4bn valuation. Windsurf is another AI coding assistant, which raised a Series C funding round last year at a valuation of $1.25bn.
Both start-ups are backed by Peter Thiel’s Founders Fund. While Windsurf is also backed by General Catalyst and Kleiner Perkins, and Cognition’s investors include Khosla Ventures, Pear VC and 8VC.
The acquisition was to see Cognition “investing heavily” in integrating Windsurf’s capabilities into its own products, Cognition CEO Scott Wu said. According to him, the acquisition was a doubling down on the start-up’s aim to build the “future of software”.
Now the Wall Street Journal (WSJ) is reporting that a new round led by Founders Fund sees Cognition raise $500m toward that goal, as the AI coding start-up sector continues to attract hundreds of millions from venture investors in the US, as some demonstrate rapid revenue growth.
According to Wu in his July blog post on the acquisition, Windsurf was making “$82M of ARR [annualised revenue rate], with enterprise ARR doubling quarter over quarter”.
As the AI code-generation sector heats up, the WSJ article also pointed to the intense workplace culture these start-ups espouse, and Wu has recently said that those who can’t keep up with the “extreme performance culture” will be let go.
In a recent post on X, Wu said the team “routinely are at the office through the weekend and do some of our best work late into the night”.
“Many of us literally live where we work,” he said. “We know that people who joined Windsurf didn’t expect to join Cognition and while we’re proud of how we work, we understand it’s not for everyone. We gave our team the opportunity to decide,” Wu continued in a post that seemed to reply to the recent article by The Information that reported it had let go of 30 Windsurf staff after the acquisition.
“Regardless of their decision, we accelerated and cashed out all four years of equity for everyone from Windsurf, even for the 85pc of employees who hadn’t hit their one year cliff,” Wu continued.
“And for those who opt out, we’re providing an additional nine months of pay on top of this.” It’s a philosophy long embraced by the Musks and Thiels of this world who have little time for normal work-life balance for their employees or investees.
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