Google paid $2.4 billion to license Windsurf’s technology and hire its CEO Varun Mohan, Co-Founder Douglas Chen, and select R&D team members. The deal was split into two equal parts: $1.2 billion went to Windsurf’s investors, while the other half was compensation packages for the 40 employees hired by Google. Windsurf had raised $310 million and was valued at $1.25 billion.
Investors saw a 4x return on their original funding. Greenoaks, which led the seed and Series A rounds and owned 20%, returned about $500 million on their $65 million investment. Kleiner Perkins, which led the Series B, returned about 3x its invested capital.
However, the deal did not benefit many of Windsurf’s 250 employees. Those hired in the last year didn’t receive a payout. The 200 employees not hired by Google were also left out.
Google’s Windfall Critics Voices Concerns
Investors left over $100 million for the company to operate, but some argue this could have been used to pay all employees. Some employees hired by Google had their stock grants revoked and vesting timelines restarted.
Top VCs criticized the founders for not sharing the proceeds with the whole team. One prominent VC said they wouldn’t work with the founders again. After uncertainty following the Google deal, Windsurf’s remaining entity, led by interim CEO Jeff Wang, sold itself to Cognition.
Cognition acquired Windsurf’s IP and staff not hired by Google. The exact terms were not disclosed, but the acquisition allowed every employee to gain financially. Estimates put the price at $250 million.
The deal highlights the intense interest in AI coding and the trend of acquihire deals by major tech firms. It strengthens Google’s AI talent position but has faced criticism over the treatment of Windsurf employees.