What is WindSurf

Windsurf is an AI-Native IDE.

Windsurf, formerly known as Codeium, has quickly become a notable name in the AI developer tools landscape. Its journey from a backend GPU optimization startup to a fully AI-integrated integrated development environment (IDE) illustrates the rapid evolution of software tooling in the generative AI era.

Origins: From Exafunction to Codeium

The company that would become Windsurf started in 2021 under the name Exafunction, founded by Varun Mohan and Douglas Chen, both MIT graduates. Initially, the company focused on GPU optimization infrastructure for machine learning workloads. However, by mid-2022, it became clear that the real opportunity lay in applying AI directly to the developer workflow.

The team pivoted to building a code completion product - Codeium - which launched in late 2022. Codeium was positioned as a free, fast, and privacy-respecting alternative to GitHub Copilot. It gained traction quickly, offering autocomplete capabilities powered by in-house transformer models and integrations into popular editors like VS Code, JetBrains IDEs, and Jupyter Notebooks.

By the end of 2023, Codeium had reached millions of users, including adoption by enterprise teams, and began generating meaningful revenue from its enterprise licensing model.

From Codeium to Windsurf: Building a Full AI-Native IDE

In 2024, the company announced a major transformation: the launch of Windsurf, an AI-native IDE designed from the ground up to support complex agentic coding workflows.

Unlike traditional IDEs that bolt on AI features, Windsurf integrated AI as a core part of the development experience. Its flagship features included:

• Cascade, a project-aware multi-agent system that could reason across large codebases, generate and edit multiple files simultaneously, and execute refactors.
• Supercomplete, an advanced autocompletion engine.
• One-click deploy, which allowed developers to deploy applications directly from the IDE.
• Real-time previews and “code from design” capabilities (e.g., generating code from a Figma layout or screenshot).

This product direction reflected a growing trend in developer tooling: not just accelerating development with AI, but rethinking the entire programming interface for an agent-assisted future.

Growth and Funding

Windsurf saw rapid growth following its rebrand and product relaunch:

• By early 2025, Windsurf had surpassed 1 million active users.
• It reported $40 million in annual recurring revenue (ARR).
• It had strong enterprise penetration, especially in AI-native and fintech startups.

To support its growth and product roadmap, Windsurf raised $243 million in total funding, with its most recent Series C round led by General Catalyst.

Other investors included Initialized Capital, Elad Gil, and angel operators from OpenAI, Google, and Meta.

Acquisition Interest from OpenAI

In early 2025, industry sources reported that OpenAI had entered talks to acquire Windsurf in a deal valued at approximately $3 billion. The motivation behind the acquisition was strategic: Windsurf’s agentic coding tools complemented OpenAI’s broader ambition to evolve ChatGPT into a full AI programming assistant.

However, the deal encountered structural challenges.

Under the terms of OpenAI’s agreement with Microsoft, any company acquired by OpenAI could potentially fall under Microsoft's commercial purview. This created a potential conflict: OpenAI wanted to keep Windsurf independent of Microsoft's GitHub Copilot team, but doing so would have required renegotiating terms - something that proved too complex within the available time window.

As a result, the acquisition offer expired before being finalized. No deal was announced, and OpenAI shifted its focus elsewhere.

Google Licensing Deal

Following the collapse of the OpenAI deal, Windsurf entered discussions with other industry players. In July 2025, Google DeepMind confirmed that it had reached a licensing agreement with Windsurf for access to core technologies related to its agent system and code modeling stack.

At the same time, Windsurf’s CEO and co-founder Varun Mohan, along with several key engineers, joined Google DeepMind. While not officially labeled an acquisition or acquihire, the move effectively transitioned Windsurf’s core AI leadership to Google.

In response, Windsurf appointed Jeff Wang as interim CEO and named Graham Moreno, a longtime business operations lead, as president. The company has stated its intent to continue developing the Windsurf IDE independently.

What’s Next for Windsurf?

While the departure of its CEO and co-founder raised concerns among some users and investors, Windsurf continues to operate as a standalone company. It has a strong engineering team, considerable capital reserves, and an established product with enterprise customers.

Some key questions going forward include:

• Can Windsurf maintain innovation velocity without its founding team?
• Will the licensing of its core models to Google affect its competitive moat?
• How will it differentiate in a rapidly evolving space that now includes Cursor, GitHub Copilot Workspace, Replit AI and KAEditor ?

So far, the team has signaled that it will continue supporting the existing product roadmap while exploring new integrations, including support for additional languages and frameworks.

Broader Implications for the Developer Tools Market

The Windsurf story illustrates several important themes shaping the future of software development:

• AI-Native Interfaces: There’s a shift from AI-enhanced tools (like autocomplete plugins) to AI-native development environments that treat code as a co-authored process.
• Agent-Based Programming: The idea of coding with multiple intelligent agents is gaining traction, and Windsurf was among the first to deploy this concept at scale.
• Consolidation Pressure: Big players like OpenAI, Google, and Microsoft are all vying for talent and IP in this space, leading to aggressive acquisition and licensing strategies.
• Startup Fragility: Even fast-growing startups can be derailed by the complexity of strategic partnerships and external dependencies.

Windsurf remains a case study in both the promise and challenges of building frontier AI tools in a competitive, fast-moving market.

Conclusion

Windsurf's journey from a GPU infrastructure startup to one of the leading AI-native IDEs underscores how quickly the developer experience is evolving. While its recent leadership shakeup and the failed OpenAI acquisition have changed its trajectory, the company still plays a central role in the conversation about the future of programming with AI.

Whether Windsurf continues as an independent innovator or becomes a platform others build on, its early work on agentic development environments has helped shape the next generation of tools—and the expectations of millions of developers worldwide.