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by jampa 309 days ago
> My question is what happened to the $2.4B

We don't know what deal they made with the VCs, but they could have multiple liquidation preference agreements.

> A liquidation preference multiple (e.g., 1x, 2x) determines how much investors receive before any distribution to common shareholders. A 2x preference means investors are entitled to twice their initial investment amount before others receive payouts.
1 comments
CalChris 309 days ago
So Google writes a check for $2.4B to Windsurf and gets the IP. Check deposited with Windsurf. Ledger entries made. Windsurf now has $2.4B in assets more than it had before. Money in the bank. Preference cliffs do not apply to this licensing deal. Key employees and CEO then take a 2.4 mile hike over to Google. Lunch is served.

Then Cognition offers $250M for Windsurf itself. Ok, I can imagine the preference cliffs kicking in now. But Windsurf just got a check for $2.4B and I don't think they had anywhere close to that in liabilities.

So where'd the $2.4B go? This seems like a strange deal.

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rohansood15 309 days ago
1.2B went to investors, the remaining 1.2B was actually an incentive/payout for the founders/employees that google took. The company basically has whatever money it had in the bank, plus a bit more from Google - but no investor liabilities.
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CalChris 309 days ago
Ok, Google can pay $1.2B to the CEO and key employees to get them to walk. The other $1.2B is for the Windsurf IP and it cannot go directly to the investors. It has to go through the company where it is first revenue and then an asset.

But Windsurf could distribute profit at this point before the Cognition deal. I guess this is where the preference rights got exercised. The tweet from employee #2 said his stock wasn't worth anything. Actually, he got preferenced out of the $1.2B in dividends.

Then came the $250M Cognition deal. He got preferenced out of the proceeds of the Cognition deal as well.

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nateglims 309 days ago
According to TechCrunch it was direct to investors: https://techcrunch.com/2025/08/01/more-details-emerge-on-how...
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rohansood15 308 days ago
The company can also issue a share buyback. Doesn't have to be profits. And you're right about the preference rights.

Employees who haven't vested their shares can't complain/enforce tag-along/sue for minority investor rights.

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