The high costs and thin margins threatening AI coding startups

In February, AI coding startup Windsurf was in talks to raise a big new round at a $2.85 billion valuation led by Kleiner Perkins , at double the valuation it hit six months earlier, sources told TechCrunch at the time. That deal didn’t happen, according to a source familiar with the matter. Instead, news broke in April that the startup planned to sell itself to OpenAI for roughly the same valuation: $3 billion .

While that deal famously fell apart, one bigger question remains: if the startup was growing that fast and attracting VC interest, why would it sell at all?

Insiders tell TechCrunch that for all the popularity and hype around AI coding assistants they can actually be massively money-losing businesses. Vibe coders generally, and Windsurf in particular, can have such expensiv