Extra main points emerge on how Windsurf’s VCs and founders were given paid from the Google deal via NewsFlicks

Even weeks after the revelation that Google paid Windsurf $2.4 billion to license its era, whilst concurrently hiring away its CEO and best ability, the deal’s implications are nonetheless damn some founders and startup staff throughout Silicon Valley.

Google’s cost to the startup was once successfully cut up in two equivalent portions, in step with two other folks conversant in the deal. Traders’ portion was once $1.2 billion. 

The opposite part was once within the type of reimbursement programs for roughly 40 Windsurf staff employed via the tech massive with a considerable portion of that $1.2 billion going to the startup’s co-founders, Varun Mohan and Douglas Chen, resources say.

The transaction was once a just right end result for VCs, which integrated Greenoaks, Kleiner Perkins, and Common Catalyst. Windsurf raised a complete of about $243 million as of its remaining lift in 2024 that valued the corporate at $1.25 billion, which means that the whole go back to buyers was once about 4 instances their unique investment. 

Greenoaks, which led Windsurf’s seed and Collection A financings and owned 20% of the corporate, returned about $500 million on their $65 million funding within the startup, in step with an individual conversant in the subject. Kleiner Perkins, which led Windsurf’s Collection B, returned about thrice its invested capital, in step with someone else conversant in the deal.

Google, Kleiner Perkins, and Greenoaks declined to remark. Common Catalyst, Varun Mohan, and Douglad Chen didn’t reply to a request for remark.

Even so, maximum buyers have been aiming for a extra important win from the corporate.

In February, TechCrunch reported that Kleiner Perkins was once in talks to guide a contemporary spherical of investment valuing the startup, which was once then referred to as Codeium, at a $2.85 billion valuation. That deal didn’t occur, in step with an individual conversant in the subject, as a result of Windsurf had as a substitute agreed to be bought via OpenAI for $3 billion.

As everyone knows now, the OpenAI acquisition unraveled and Google swooped in with its deal structured to supply investor returns, download ability and IP with out obtaining inventory. 

However what’s damn the Valley is that this: whilst Google’s deal was once just right for the co-founders and VCs, it didn’t receive advantages a big portion of Windsurf’s roughly 250 staff, particularly once they have been anticipating a payout from the sale to OpenAI.

In an ordinary acquisition, staff would get cash for the stocks they owned, and frequently have their vesting agenda speeded up. Then again, Windsurf staff who have been employed over the past yr didn’t obtain a payout from the deal, those other folks stated.

The Google deal was once particularly unsettling to roughly 200 Windsurf staff no longer employed via the quest massive. 

As an alternative of siphoning each and every penny of Google’s cost into their very own wallet, buyers opted to depart the corporate with over $100 million in capital.

One supply says this was once totally funded via VCs, which means their general payout was once about $1.1 billion. Then again, someone else stated that the founders’ similarly chipped in to depart the corporate with a nest egg from the Google cost.

A couple of other folks stated that the cash left for the corporate would had been enough to pay all final staff proceeds at Google deal’s per-share valuation, irrespective of how lengthy they’d been with the corporate.  Then again, to have executed that instantly would had been problematic, leaving the corporate with much less money to function and – with founders, key other folks long past – without a buyers able to finance a brand new lift. The remainder management would most probably have needed to close down after making such money distributions, one of the crucial other folks stated. In the meantime, someone else claimed that the corporate had sufficient capital to pay out staff and proceed to function.

That distinction of opinion is handiest a part of the explanation the deal was so arguable.

What’s extra, a minimum of one of the staff Google did rent, in spite of horny pay and advantages, noticed their inventory grants revoked and their vesting timelines restarted. That supposed they’d have to attend an extra 4 years for his or her general payout in Google inventory, in step with other folks conversant in the deal. 

Some best VC condemned the three-year-old startup’s co-founders for no longer sharing their providence with all of the individuals who helped construct the corporate.

“Windsurf and others are truly dangerous examples of founders leaving their groups in the back of and no longer even sharing the proceeds with their workforce,” wrote Vinod Khosla on X. “I indubitably would no longer paintings with their founders subsequent time.”

After a number of days of limbo following the announcement of the Google deal, Windsurf’s final entity, underneath the management of period in-between CEO Jeff Wang, controlled to promote itself to Cognition.

Cognition got Windsurf’s IP and product, and taken on all body of workers no longer employed via Google.

Whilst the precise deal phrases of that sale have been no’t disclosed, the purchase allowed each and every worker to financially acquire from the sale, in step with a weblog revealed via Cognition.  

Two different resources estimated to TechCrunch that Cognition paid $250 million to obtain Windsurf’s final entity. 

Cognition didn’t reply to a request for remark.