Artificial intelligence lab and software startup Cognition AI is weighing a new funding round of more than $1 billion that could push the company’s valuation above $40 billion, a 50% increase in less than three months.

Backers in the funding round are looking to secure a stake in the company, as its annualized revenue run rate nears $1 billion, sources familiar with the matter told Bloomberg. 

Details surrounding the potential fundraise are subject to change, and the company could ultimately decide to pursue financing on other terms, sources added.

Cognition’s latest funding round, which took place in May, valued the company at $26 billion. 

Entrepreneurs Scott Wu, Steven Hao, and Walden Yan founded the firm in 2023. The San Francisco-based AI lab has grown 50% month-over-month for the last six months. The company closed a $400 million funding round in September, putting the company’s valuation at $10.2 billion, CNBC reported.

Cognition described itself as an “agent lab” that works with multiple foundation model providers so customers can choose models based on cost and performance. 

The company evaluates model behavior across more than 100 software-engineering task categories and designs its software agent Devin to help teams manage spending as usage scales.

Should the company move forward with the new funding round at a valuation of $40 billion, it would surpass the valuation Cursor commanded in private markets prior to its deal with SpaceX. With a $29.3 billion valuation, it held discussions regarding a fundraise at a $50 billion valuation in March and an ARR of $2 billion.

Last July, Cognition signed a definitive agreement to acquire Windsurf, after the company lost its CEO and its researchers left to join Google. OpenAI had been in discussions with Windsurf regarding a merger; however, those discussions did not result in a deal.

Photo: Shutterstock