More details emerge on how Windsurf’s VCs and founders got paid from the Google deal

In the wake of Google's staggering $2.4 billion deal to license Windsurf's technology, the repercussions are echoing throughout Silicon Valley. This monumental transaction, which included Google's recruitment of Windsurf's CEO and top talent, has caused unrest among many of the startup's founders and employees. Sources close to the deal reveal that the payment was divided into two equal halves: $1.2 billion for investors and another $1.2 billion allocated for the compensation packages of around 40 employees who transitioned to Google. Much of this investor share was directed towards Windsurf's co-founders, Varun Mohan and Douglas Chen. Notably, the venture capital firms involved, including Greenoaks, Kleiner Perkins, and General Catalyst, are reporting substantial returns. After raising approximately $243 million, Windsurf was valued at $1.25 billion, yielding about four times the initial investment for its backers. Greenoaks, which spearheaded Windsurf’s seed and Series A funding rounds, is projected to see a return of around $500 million from a $65 million investment. Meanwhile, Kleiner Perkins, which led Series B, is expected to achieve returns of approximately three times its initial outlay. However, despite these lucrative outcomes for investors, many Windsurf employees, particularly those not hired by Google, are feeling overlooked. Previously, there were high hopes for a potential acquisition by OpenAI valued at $3 billion, which ultimately fell through, leading to Google's intervention. While the deal was advantageous for co-founders and investors, it left approximately 250 employees in a precarious position, especially those anticipating payouts from the failed OpenAI acquisition. In a standard acquisition, employees typically benefit from stock ownership and accelerated vesting schedules. However, recent hires at Windsurf did not see any financial rewards from the Google deal. Furthermore, it has been reported that some employees who joined Google were faced with revoked stock grants and extended vesting periods, forcing them to wait an additional four years for their stock options. Criticism has emerged from notable venture capitalists, who expressed dismay at the co-founders' decision not to share financial gains with the broader team. Vinod Khosla noted on social media that the actions of Windsurf’s founders serve as a cautionary tale for future collaborations. Amidst the turmoil, Windsurf’s remaining leadership, guided by interim CEO Jeff Wang, successfully facilitated a sale to Cognition, which acquired Windsurf’s intellectual property and assets while retaining all staff not absorbed by Google. Although specific terms of this acquisition remain undisclosed, it is reported that Cognition paid around $250 million, ensuring that every remaining employee would receive financial benefits from the transaction.