Google’s $2.4 billion deal with AI coding company Windsurf has left investors and employees feeling bitter about the unusual terms of the acquisition. The deal, which involves hiring Windsurf’s CEO and top talent, but licensing the company’s intellectual property, has raised concerns that startup employees are being “left behind” in a financially engineered way.
Windsurf was on the verge of being acquired by OpenAI for $3 billion, but the deal fell apart at the last minute. The resulting chaos led to last-minute negotiations and ultimately resulted in Windsurf being split into two companies: one owned by Google, which hired its CEO and top talent, and another owned by Cognition, which paid around $300 million for a smaller stake.
The deal has been criticized by some investors, who say it’s not the venture-style outcome they hoped for. “We would’ve preferred to just take a clean exit from OpenAI,” said Krish Ramadurai, a partner at AIX Ventures. The deal also raises questions about the future of Windsurf and its employees.
“Their mojo gets thrown in the blender,” Ramadurai said. “The key leaders and the engineers that get poached are all stoked, but everybody else that’s left behind is in this weird purgatory situation because they have to maintain the momentum even though they lost the key talent in the leadership.”
As more deals like this come on the horizon, startup employees are being warned about the importance of joining the right company. “Startups with unique data feeds, embedded distribution or clear recurring revenue have leverage to stay independent,” said Jake Saper, a general partner at Emergence Capital.
The deal also highlights the trend of Big Tech companies using licensing agreements to gain access to AI talent and technology without having to go through a traditional acquisition process. This has been seen in other deals such as Character AI, Inflection, and Scale AI, where Big Tech companies have paid billions of dollars for stakes or hired key leaders.
The future of the startup ecosystem is uncertain, but one thing is clear: startup employees need to be aware of the deal-making landscape and make informed decisions about which company they want to join.
Source: https://www.businessinsider.com/people-in-tech-are-worried-windsurf-has-set-dangerous-precedent-2025-7