OpenAI's Acquisition Pursuit: From Cursor to Windsurf

OpenAI's Pursuit of Coding AI Companies

Reports surfaced indicating OpenAI was negotiating the acquisition of Windsurf, an AI coding firm, for a reported $3 billion. This news immediately prompted speculation within the AI community regarding alternative acquisition targets.

Specifically, many questioned why OpenAI didn't prioritize acquiring Anysphere, the developers of the Cursor coding assistant. OpenAI had previously invested in Anysphere through its Startup Fund, beginning with a seed round investment in late 2023.

Acquisition Talks with Anysphere

According to a CNBC report, OpenAI did, in fact, initiate discussions with Anysphere regarding a potential acquisition, both in 2024 and earlier this year. However, these negotiations ultimately proved unsuccessful.

Instead of being acquired, Anysphere is currently exploring options to secure additional funding. Bloomberg reported last month that the company is aiming for a valuation of approximately $10 billion in this new funding round.

The Significance of Code Generation

OpenAI’s shift in focus towards acquiring another coding assistant company underscores the strategic importance of establishing a strong presence in the code generation market. Capturing a portion of this market is now a key priority for the creators of ChatGPT.

Windsurf currently generates around $40 million in annual recurring revenue (ARR), as reported by TechCrunch. In comparison, Anysphere’s Cursor is said to be generating approximately $200 million in ARR.

Codex CLI and the Need for Acceleration

While OpenAI has introduced its own code-writing tool, the Codex CLI “agent,” released just this week, the company’s pursuit of Windsurf suggests a desire to accelerate its market entry.

The attempt to acquire Windsurf indicates OpenAI doesn’t intend to rely solely on the Codex CLI to gain widespread customer adoption and market share.