A few weeks after the revelation that Google paid $2.4 billion to license its technology, it is simultaneously hiring CEOs and top talent, and the impact of the deal has rattled out some Silicon Valley founders and startup employees.
According to two people who are well-versed in trading, Google’s payments to startups were effectively split between two equal parts. The investor portion was $1.2 billion.
The other half was in the form of a compensation package for around 40 Windsurf employees hired by the Tech giant, earning a significant portion of $1.2 billion from startup co-founders Varun Mohan and Douglas Chen.
The deal was good for VCS, including Greenoaks, Kleiner Perkins and General Catalyst. Windsurf raised a total of approximately $243 million at the time of its final pay raise in 2024, valued the company at $1.25 billion. In other words, the total revenue to investors was about four times the original funds.
Greenoaks, who led Windsurf’s seed and Series A funding and owned 20% of the company, returned about $500 million in a $65 million startup investment, according to anyone familiar with the issue. Kleiner Perkins, who led Windsurf’s Series B, returned roughly three times his investment capital, according to another person familiar with the deal.
Google, Kleiner Perkins, and Greenoaks declined to comment. General Catalyst, Varun Mohan, and Douglas Chen did not respond to requests for comment.
Still, most investors were hoping for a more important victory from the company.
TechCrunch Events
San Francisco
|
October 27th-29th, 2025
In February, TechCrunch reported that Kleiner Perkins was in talks to lead new funding and was in discussions to value the startup, then known as Codeium, at $2.85 billion. Those familiar with the issue said that the transaction did not occur. Because Windsurf agreed to be purchased by Openai for $3 billion instead.
As we all know, Openai’s acquisition was lifted and Google plummeted in a deal that was configured to provide investors’ returns and acquire talent and IP without acquiring shares.
But here’s what rattles through the valley: The Google deal was good for co-founders and VCS, but it didn’t benefit most of Windsurf’s roughly 250 employees, especially after hoping to pay from sales to Openai.
In a typical acquisition, employees get money for the shares they own, and often accelerate their vesting schedule. However, Windsurf employees hired last year were not paid from the transaction, these people said.
Google’s deals have particularly unsettled the roughly 200 Windsurf employees who are not employed by the search giant.
Instead of sucking every penny of Google’s payment into their pocket, investors have chosen to leave the company with more than $100 million in capital.
According to one source, this is fully funded by the VCS. That is, the total payment was around $1.1 billion. But another said the founder was similarly missing to entrust the nest eggs from Google payments.
Several people said the revenues of all employees remaining in the company were sufficient to pay the revenues by Google Deal, regardless of how long they spent with the company. But doing that quickly was a problem, leaving the company operating with less cash, leaving the founders and key people out of it, and not being prepared to hire a new salary increase. The rest of the leadership would have had to close after making such cash distributions, one of the people said. Others, meanwhile, claimed that the company had enough capital to pay its employees and keep it operating.
That difference of opinion is only part of why the deal is so controversial.
Additionally, despite at least attractive wages and benefits, at least some of Google’s employing employees have been revoked from their stock grants and vesting timelines have resumed. This means that people familiar with the transaction will have to wait another four years for their total payments on Google stock.
Some top VCs have accused the three-year-old startup co-founder of not sharing windfall with all those who helped build the company.
“Windsurf and others are really bad examples of founders who don’t even leave their team behind and share it with them,” Vinod Khosla writes in X.
After several days of Limbo following the announcement of the Google deal, under the leadership of interim CEO Jeff Wang, the remaining entities in Windsurf were able to sell themselves to recognition.
Cognition has acquired Windsurf’s IP and product, attracting all staff who are not employed by Google.
A blog published by Cognition does not reveal the exact terms and conditions of the sale, but the acquisition allowed all employees to acquire financially from the sale.
Two other sources estimated TechCrunch that Cognition paid $250 million to acquire the remaining entities of Windsurf.
The recognition did not respond to requests for comment.
