More Details Emerge On How Windsurf’s Vcs And Founders Got Paid From The Google Deal

Even weeks aft nan revelation that Google paid Windsurf $2.4 cardinal to licence its technology, while simultaneously hiring distant its CEO and apical talent, nan deal’s implications are still rattling immoderate founders and startup employees crossed Silicon Valley.

Google’s costs to nan startup was efficaciously divided successful 2 adjacent parts, according to 2 group acquainted pinch nan deal. Investors’ information was $1.2 billion. 

The different half was successful nan shape of compensation packages for astir 40 Windsurf labor hired by nan tech elephantine pinch a important information of that $1.2 cardinal going to nan startup’s co-founders, Varun Mohan and Douglas Chen, sources say.

The transaction was a bully result for VCs, which included Greenoaks, Kleiner Perkins, and General Catalyst. Windsurf raised a full of astir $243 million arsenic of its past raise successful 2024 that weighted nan institution astatine $1.25 billion, which intends nan full return to investors was astir 4 times their original funding. 

Greenoaks, which led Windsurf’s seed and Series A financings and owned 20% of nan company, returned astir $500 cardinal connected their $65 cardinal finance successful nan startup, according to a personification acquainted pinch nan matter. Kleiner Perkins, which led Windsurf’s Series B, returned astir 3 times its invested capital, according to different personification acquainted pinch nan deal.

Google, Kleiner Perkins, and Greenoaks declined to comment. General Catalyst, Varun Mohan, and Douglad Chen didn’t respond to a petition for comment.

Even so, astir investors were aiming for a much important triumph from nan company.

In February, TechCrunch reported that Kleiner Perkins was successful talks to lead a caller information of backing valuing nan startup, which was past known arsenic Codeium, astatine a $2.85 cardinal valuation. That woody didn’t happen, according to a personification acquainted pinch nan matter, because Windsurf had alternatively agreed to beryllium purchased by OpenAI for $3 billion.

As we each cognize now, nan OpenAI acquisition unraveled and Google swooped in pinch its woody system to connection investor returns, get talent and IP without acquiring stock. 

But what’s rattling nan Valley is this: while Google’s woody was bully for nan co-founders and VCs, it didn’t use a ample information of Windsurf’s astir 250 employees, particularly aft they were expecting a payout from nan waste to OpenAI.

In a emblematic acquisition, labor would get money for nan shares they owned, and often have their vesting schedule accelerated. However, Windsurf labor who were hired complete nan past twelvemonth didn’t person a payout from nan deal, these group said.

The Google woody was particularly unsettling to astir 200 Windsurf labor not hired by nan hunt giant. 

Instead of siphoning each penny of Google’s costs into their ain pockets, investors opted to time off nan institution pinch complete $100 cardinal successful capital.

One root says this was wholly funded by VCs, meaning their full payout was astir $1.1 billion. However, different personification said that nan founders’ arsenic chipped successful to time off nan institution pinch a nest ovum from nan Google payment.

Multiple group said that nan money near for nan institution would person been capable to salary each remaining labor proceeds astatine Google deal’s per-share valuation, sloppy of really agelong they had been pinch nan company.  However, to person done that instantly would person been problematic, leaving nan institution pinch little rate to run and – pinch founders, cardinal group gone – pinch nary investors fresh to finance a caller raise. The remaining activity would apt person had to unopen down aft making specified rate distributions, 1 of nan group said. Meanwhile, different personification claimed that nan institution had capable superior to salary retired labor and proceed to operate.

That quality of sentiment is only portion of nan logic nan woody became truthful controversial.

What’s more, astatine slightest immoderate of nan labor Google did hire, contempt charismatic salary and benefits, saw their banal grants revoked and their vesting timelines restarted. That meant they’d person to hold an further 4 years for their full payout successful Google stock, according to group acquainted pinch nan deal. 

Some apical VC condemned nan three-year-old startup’s co-founders for not sharing their windfall pinch each nan group who helped build nan company.

“Windsurf and others are really bad examples of founders leaving their teams down and not moreover sharing nan proceeds pinch their team,” wrote Vinod Khosla connected X. “I decidedly would not activity pinch their founders adjacent time.”

After respective days of limbo pursuing nan announcement of nan Google deal, Windsurf’s remaining entity, nether nan activity of interim CEO Jeff Wang, managed to waste itself to Cognition.

Cognition acquired Windsurf’s IP and product, and brought connected each unit not hired by Google.

While nan nonstop woody position of that waste were no’t disclosed, nan acquisition allowed each worker to financially summation from nan sale, according to a blog published by Cognition.  

Two different sources estimated to TechCrunch that Cognition paid $250 cardinal to get Windsurf’s remaining entity. 

Cognition didn’t respond to a petition for comment.