High costs and delicate margins that threaten startups are artificial intelligence

In February, Windsurf was to start coding AI in talks to raise a large new round in A. $ 2.85 billion, led by Kleiner BirkinsWhen the evaluation is weak, it reached six months before that, the sources told Techcrunch at the time. This deal did not occur, according to a source familiar with the matter. Instead, the news erupted in April that the startup is planning to sell itself to Openai for almost the same evaluation: 3 billion dollars.

While this deal collapsed, one larger question remains: if the startup is growing quickly and attracting VC’s attention, then why do you sell at all?

Teccrunch informants tell that despite the popularity and noise of artificial coding assistants, they can actually be money losing companies. Programmers can generally have a videos in particular, such as these expensive structures so that their total margins are “very negative”, as a person close to Windsurf Techcrunch said. This means that it costs the product more than it can receive the start starting.

This is due to the high costs of using large language models (LLMS), the person is clear. Artificial intelligence coding assistants are particularly exposed to the presentation of the latest, most advanced and most expensive LLMS because the models manufactures their recent models in particular for improvements in coding and relevant tasks such as error correction.

This is a challenge doubled by fierce competition in the coding and symbol. Competitors include companies that already have huge customer bases such as Anysphere and GitHub Copilot.

The most obvious path to improve margins in this work includes startups that build their own models, thus eliminating the costs of paying suppliers such as anthropor and Openai.

The person said: “It is a very expensive work if you are not in the model game,” the person said.

But this idea comes with its own dangers. The person said that Varun Mohan, ultimately against the company that builds its own model-has decided a very expensive pledge.

In addition, models makers compete directly. Anthropor offers Claude code and provides Openai manuscript, for example.

The sale of business was a strategic step to lock a great return before it was undermined by the same companies that provided artificial intelligence, including Openai and anthropology, which was also entering the artificial intelligence coding market.

Many people believe that the same pressure on the margins faced by Windsurf can affect Anysphere, the index maker, as well as programmers as loveble, Releit and others.

“The margins on all the” General Code “products are either neutral or negative. It is very bad.” He added that he believes that the changing costs of all startups in the sector are very close, probably in the range of 10 % to 15 % of each other.

Unlike Windsurf, Anysphere was so rapidly so quickly that it intends to stay an independent company, then already I refused acquisition offersIncluding, reports say, from Openai.

And anysphere It was announced in January It tries to build its own model, which can give it more control over its expenses. In July He rented two of the two leaders from Claude’s human code I mentioned the information, after two weeks, these employees Return To work in humans.

In addition to building a model, you can expect the cost of LLMS to decrease over time.

“This is what everyone screams,” said Eric Nordernder, the general partner of Google Ventures. “The cost of reasoning today, this is the most precious thing it will be.”

It is not quite clear how true it is. Instead of falling as expected, The cost of some artificial intelligence models increasedBecause they use more time and mathematical resources to deal with complex multiple tasks.

When this changes, it remains to see. On Thursday, for example, Openai feet New main model, GPT-5, with much lower fees than its competitor, Claude Obus than man. And anysphere I was offered immediately This model as an option for the indicator users.

Anysphere has also recently changed its pricing structure to pass the increasing operating costs to operate the latest Claud, especially for its most active users. This step caught some of Customers indicated by surpriseSince they did not expect additional fees as well as the $ 20 PRO plan per month. Michael Tewel, CEO of Anysphere later, apologized for uninterrupted communication about changing pricing in A. Blog post.

This is the difficult rock and place. Although the indicator is one of the most artificial intelligence applications $ 500 million in ARR in JuneInvestors say that the company’s user base may not be sincere for the product if another company developed a tool that exceeds the indicator.

Anysphere did not respond to the comment.

Given the competitive scene and costs, Windsurf’s decision to exit may be understood. After the Openai deal fell, the founders and the main employees left to join Google in a deal that led to a $ 2.4 billion payment For the main shareholders. After that remaining work She sold herself to perceive.

While many, including prominent VCS, criticized Mohan for leaving about 200 employees without Google, a source of knowledge of the deal that the acquisition has already increased the results of all employees.

Beyond the indicator, other artificial intelligence coding tools are also among the fastest growing startups in the generation of LLM, such as repetition, beloved, and bolts, all of which depend on models also.

In addition, if this commercial sector is very common, which already generates hundreds of millions of revenues or more per year, it faces difficulty building on the top of models, what can this mean for other most emerging industries?