Artificial intelligence startup Cognition has cemented its place among the industry’s elite, announcing on Monday that it closed a $400 million funding round at a $10.2 billion valuation — a milestone that includes the newly raised capital.
The funding, led by Peter Thiel’s Founders Fund with participation from Lux Capital, 8VC, and Bain Capital Ventures, underscores the appetite among investors for high-growth AI companies despite growing concerns over saturation in the sector.
Cognition is best known as the developer of Devin, an AI software engineer designed to automate and accelerate coding tasks. The company vaulted into the spotlight in July when it acquired Windsurf, a rival startup that had recently been rocked by leadership departures. That bold move has since redefined Cognition’s trajectory.
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Windsurf’s turbulent path
Windsurf had been in advanced talks with OpenAI for a multibillion-dollar acquisition earlier this year, but the negotiations collapsed. Soon after, its founders and top researchers defected to Google, in a deal that included a $2.4 billion payout from the search giant in licensing fees and compensation.
In the aftermath, Cognition swooped in to acquire Windsurf, a move that surprised many in Silicon Valley given the sudden shifts in its leadership. The acquisition has already delivered measurable gains. According to CEO Scott Wu, Cognition’s annual recurring revenue (ARR) has more than doubled since the deal closed, with the combined enterprise ARR growing more than 30 percent in just two months.
“We’ll continue to invest significantly in both Devin and Windsurf, and our customers are already seeing how powerful the combination is together,” Wu wrote in a blog post announcing the funding.
The integration has been aided by Jeff Wang, who stepped in as CEO of Windsurf following the founders’ exit. In a LinkedIn post on Monday, Wang reassured customers that the tighter alignment between Windsurf and Cognition products would unlock new synergies: “It’s been quite an eventful last few months, and now it’s time to show what we’re made of.”
The $10 billion club
Cognition’s fresh valuation puts it in rare company, joining the likes of OpenAI and Anthropic, which have already established themselves as industry leaders. It also follows last week’s news that Sierra, the AI startup founded by former Salesforce co-CEO Bret Taylor, raised $350 million at a $10 billion valuation.
The flurry of billion-dollar valuations illustrates how quickly capital is flowing into the AI sector, but also highlights the mounting competition among startups trying to carve out space in a market dominated by Big Tech players such as Microsoft, Google, and Amazon.
For investors like Thiel’s Founders Fund, Cognition’s trajectory offers a chance to back an AI player that is both product-focused (through Devin) and strategically opportunistic (through the Windsurf acquisition). By comparison, OpenAI has leaned heavily on its partnership with Microsoft, while Anthropic has built its war chest through backing from Amazon and Google. Cognition’s independent path — combining product innovation with aggressive M&A — could set it apart in the long run.
The big question is whether Cognition can sustain its growth at scale. While ARR expansion has been promising, the company will need to prove that its combined suite of AI engineering and development tools can achieve widespread enterprise adoption. If successful, Cognition could emerge as one of the few independent challengers capable of standing alongside the most well-funded players in the industry.