OpenAI has struck an agreement to purchase Windsurf, a startup developing AI-powered coding tools, for a sum reported by Bloomberg to be around $3 billion, according to individuals knowledgeable about the deal. The transaction represents the most substantial acquisition undertaken by the prominent AI research lab to date. While the agreement is in place, the deal had not officially closed as of May 6. Both OpenAI and Windsurf refrained from commenting on the matter.
The move positions OpenAI to more directly challenge competitors in the rapidly expanding market for AI developer assistance, where tools aim to accelerate software creation. Windsurf, which operated under the name Codeium until a rebranding on April, was already the subject of acquisition talks involving OpenAI reported in mid-April.
Windsurf’s Rapid Ascent and Technology
Founded in June 2021, initially as Exafunction with a focus on GPU optimization, the company pivoted in 2022 towards AI developer tools. Windsurf has since attracted considerable investment, raising a total of $243 million across two major rounds: a $65 million Series B in January 2024 and a $150 million Series C led by General Catalyst in August 2024, which valued the company at $1.25 billion.
Kleiner Perkins and Greenoaks were also said to be among its backers. Reports indicated Windsurf was generating approximately $40 million in annualized recurring revenue (ARR, a projection of recurring revenue over a year) early in 2025, suggesting the $3 billion acquisition price represents a roughly 75x multiple on that figure, a steep price reflecting the intense interest in AI developer tools.
The company claims its tools, which support over 70 programming languages and integrate with more than 40 IDEs, can boost developer productivity by 25%.
Windsurf offers both cloud-based Software-as-a-Service (SaaS) and self-hosted deployment options, appealing to enterprise clients like Dell, JPMorgan Chase, and Anduril concerned with data privacy and control. Its technology includes systems like “Cascade Flow” for analyzing codebase dependencies and “Riptide,” an LLM-based code search tool. Just before its rebranding, Windsurf also announced a partnership with Netlify for easier deployment from its IDE.
Strategic Implications in a Competitive Market
Acquiring Windsurf provides OpenAI not only with specialized coding technology and engineering talent but also a direct line to Windsurf’s reported base of over 1,000 enterprise customers. The deal also prevents rivals from snapping up one of the more mature independent players in the AI coding space, a rationale highlighted by some industry analysis.
This strategic consideration is heightened by OpenAI’s own venture fund having previously invested in competitor Cursor, an AI-focused code editor startup, raising questions about how OpenAI will manage influence between the two.
The AI coding assistant market is fiercely contested. Microsoft, OpenAI’s major partner, owns GitHub, whose Copilot tool is widely used. GitHub recently enhanced Copilot with an “Agent Mode” for more autonomous operation.
Google has also made strides, launching its browser-based Firebase Studio and offering a free tier for Gemini Code Assist. Amazon is reportedly building a competing service explicitly targeting Windsurf and Cursor, while Apple is collaborating with Anthropic on AI features for its internal Xcode environment. OpenAI itself recently released a free, open-source tool, Codex CLI, in April.
OpenAI’s Largest M&A Move Amidst Funding Surge
This acquisition follows OpenAI’s massive $40 billion funding round led by SoftBank Group Corp., finalized in late March, which valued the company at $300 billion. OpenAI stated those funds were intended for research, infrastructure, and tool development. The company also recently affirmed its governance structure would remain under the control of its original nonprofit entity.
While OpenAI has made smaller acquisitions previously, such as analytics firm Rockset or video platform Multi in 2024, the $3 billion Windsurf deal is a much larger bet on the developer tools market, reflecting the high value placed on AI coding capabilities and enterprise access.
