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In one of the fastest-moving and most debated moments in the AI startup world, Windsurf, a fast-growing developer tools company, was almost acquired by OpenAI. Instead, its leadership team was hired by Google, and its remaining assets were bought by Cognition AI. All of this happened over the course of just a few days.

The whirlwind raised big questions for founders, customers, and investors alike:
Who actually owns Windsurf now? What happens to its tech and team? And is this how all AI acquisitions will work going forward?

Let’s break down what happened, why it matters, and what it says about the future of AI, startups, and tech regulation.

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What is Windsurf?

Windsurf is a high-growth AI coding startup, backed by Kleiner Perkins and Greenoaks, with ~$82 million in ARR and over 350 enterprise customers, known for its agentic IDE designed to augment developer workflows. (Reuters)

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Here's a quick overview of the events:

• OpenAI's $3B deal collapses:
  OpenAI was in late-stage talks to acquire Windsurf, reportedly valuing it around $3 billion. But according to TechCrunch, the deal fell apart over concerns about whether Microsoft, OpenAI’s biggest backer, would gain access to Windsurf’s tech.
• Google swoops in ($2.4B "reverse-acquihire"):
  TechCrunch reported that within hours, Google DeepMind hired Windsurf’s CEO Varun Mohan, co-founder Douglas Chen, and several top engineers. At the same time, Google secured a license to some of Windsurf’s core technology, in a deal reportedly worth $2.4 billion. This wasn’t a full acquisition, more like acquiring a portion of the team and tools, without buying the company. Check out Windsurf’s statement.
• Cognition buys the rest (July 14):
  Just days later, Cognition AI, maker of the AI coding agent Devin, acquired what was left: Windsurf’s codebase, brand, enterprise customers, contracts, and remaining employees. The terms weren’t disclosed. Cognition plans to fold Windsurf’s tech into Devin, which already aims to be a fully autonomous software engineer. Here is Windsurf’s statement.
  
  

So who got paid, and who didn’t?

The Windsurf deals sparked widespread discussion over who actually benefited financially. While exact terms remain private, multiple reports help paint a clearer picture. 

When Google hired Windsurf’s CEO, co-founder, and several core engineers, it did so as part of a $2.4B reverse-acquihire and IP licensing deal, not a company-wide acquisition. According to TechCrunch and The Information, employees who joined Windsurf in the past year did not receive a payout from that deal.

Shortly after, Cognition acquired the rest of Windsurf’s assets including its product, brand, and remaining staff. Cognition committed to waiving vesting cliffs and ensuring 100% of retained employees would participate financially in the new structure, likely through equity in Cognition rather than upfront cash.

This split reflects a broader reality in this kind of deal: when acquisitions are partial and fragmented, compensation outcomes can vary widely based on role, timing, and which side of the deal you end up on.

It also highlights how this structure (no full company acquisition) may have avoided triggering antitrust review, despite major shifts in talent and IP control. If more AI startups are carved up this way, regulators may face pressure to update how consolidation is defined.

“Split” acquisitions and employee payouts

Google’s move (separating Windsurf’s leadership and IP from the rest of the company) has sparked debate over fairness and transparency.

Here are real voices weighing in:

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These reactions reflect the tension: while Cognition's deal provided some financial clarity by offering accelerated vesting and equity participation, critics question whether newer or less senior employees truly benefit as much as founders or investors.

The core issue? As this deal illustrates, when startups are split across entities, the equity rules and payout structures can vary dramatically, often favoring select teams over the broader employee base. This underscores the growing need for more transparent protection mechanisms for all employees, especially in emerging “reverse-acquihire” and asset-split deals.

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Final Thoughts

The Windsurf saga shows how fast the ground is shifting in AI. Startups aren’t just being acquired, they’re being disassembled and redistributed. That means more flexibility for buyers, but also more risk for customers and teams.

For founders, this is a reminder to think not just about building a valuable company, but about how its value could be pulled apart.

For everyone else, it’s a sign that the future of tech M&A may not come in one neat package anymore.

What to Include in a Fundraising Data Room + Free Checklist

If you’re an early-stage founder navigating startup fundraising, getting your fundraising data room organized can feel overwhelming. With so many documents and investor materials to gather, it’s easy to get stuck or miss key items investors expect.

But don’t worry, a clear, simple checklist can make all the difference. It helps you build a polished, investor-ready data room that speeds up due diligence and keeps conversations moving.

Below, we break down what to include in a fundraising data room, answer common questions, and provide a free checklist to keep your fundraising assets on point.

What is a Fundraising Data Room?

A fundraising data room is a secure, well-organized digital space where you store all the key documents investors need during pre-seed to Series A rounds. Think of it as your startup’s central hub, built to simplify due diligence, reflect operational readiness, and signal your commitment to scale.

Whether you’re running your first round or preparing for a bridge, a good data room demonstrates professionalism and builds trust: key ingredients for a successful raise.

💡 Investor insight: VCs and angels don’t just look at what’s in the room, they notice how it’s presented. A clean, structured data room suggests strong internal operations.

So, what should be included in a Fundraising Data Room?

Use this section as a step-by-step guide to organize your materials. The checklist at the end serves as a quick reminder.

01. Company Overview

• Pitch deck: Your startup’s core narrative. Include the problem, solution, market, business model, competition, and team. Investors expect a crisp, data-backed story.
• Executive summary: A 1–2 page high-level overview of your business and raise. Often the first document reviewed.

02. Market Information

• Market research: Provide market size, growth trends, and TAM (Total Addressable Market) / SAM (Serviceable Available Market) / SOM (Serviceable Obtainable Market) analysis to show the scale of opportunity.
• Competitive analysis: Demonstrate your understanding of the landscape and your differentiated position.

03. Product Details

• Product roadmap: Highlight completed milestones and upcoming features to show momentum.
• Product demo: A Loom video or live link helps investors understand the UX and functionality.
• MVP or usage data: Real usage metrics from your prototype or early product help validate product-market fit.
• Go-to-market strategy: Show how you plan to acquire, retain, and grow customers.
• Tech stack overview: Detail what you’ve built, how, and what’s coming next.

04. Traction & Metrics

• Customer traction: Share metrics like user growth, retention, churn, and engagement.
• Revenue metrics: Include MRR (Monthly Recurring Revenue), ARR (Annual Recurring Revenue), and unit economics if applicable.
• Key performance indicators (KPIs): Highlight metrics tied to your core business model.
• Case studies or testimonials: Add credibility through customer stories or pilot success.

05. Financial Information

• Use of funds breakdown: Explain how the raise will be spent and tied to future milestones.
• Revenue model: Show how you make money and validate with early results.
• Financial projections: Provide 3–5 year forecasts that align with your vision.
• Burn rate and runway: Detail your current and projected cash usage.

06. Team Information

• Founder bios: Highlight backgrounds, domain expertise, and relevant wins.
• Org chart: Show current structure and reporting lines.
• Key hires: List open and planned roles that are critical to growth.
• Cap table: Updated equity ownership and option pool data.

07. Legal Documents

• Incorporation docs: Articles of incorporation and registration info.
• IP assignments: Clarify who owns the core technology.
• Key contracts: Include any major vendor or partner agreements.
• Employee agreements: Share docs showing equity and vesting terms.

08. Customer/Partner Info

• Customer agreements / LOIs (Letters of Intent): Signed interest or contracts show commercial demand.
• Strategic partnerships: Demonstrate traction or leverage with other companies.

09. Additional Materials (Optional)

• Advisory board info: Highlight credibility and strategic value.
• Press coverage: Shows traction and social proof.
• Investor updates: Optional memos showing transparency and progress.

✅ Staying organized not only signals credibility, it makes your raise smoother and easier to manage.

🚫 Common mistake: Don't upload outdated decks, inconsistent financials, or early drafts. Version control matters.

Fundraising Data Room FAQs

Can I use Google Drive as a data room?
Yes! Google Drive can work as a makeshift data room if you carefully structure folders and set appropriate permissions. However, dedicated startup fundraising platforms like Capwave provide more secure, investor-friendly spaces tailored for fundraising workflows. 

What format should the files be in?
PDFs are best for static documents like decks and legal papers. Excel or Google Sheets work for more dynamic financial models and cap tables. Avoid formats that require special software or are hard to open.

Who creates and manages the data room?
Usually, founders set up and manage the data room, or delegate it to their CFO, finance lead, or fundraising advisor. The key is keeping documents current, accurate, and accessible.

What’s the difference between a fundraising data room and a VDR?
A Virtual Data Room (VDR) is an enterprise-grade solution often used in large mergers or late-stage deals. Fundraising data rooms are simpler and tailored to startup needs but share core principles: security, organization, and controlled investor access.

What’s an example of a cap table?
A cap table lists all shareholders, their share classes, number of shares owned, options grants, and any special rights like vesting schedules or liquidation preferences.

How to price items in a fundraising pack?
Price details typically come in your term sheet and are reflected in your cap table and financial projections, rather than in the data room itself. Transparency on valuation and deal terms is crucial when you start investor conversations.

💬 Pro tip: Flag anything with complexity (SAFE stacks, multiple note rounds, etc.) in an investor memo. Context builds clarity and trust.

CTA: More Guidance + Free Checklist Here

How Capwave Can Help

Capwave helps founders get investor-ready by optimizing decks, organizing materials, and matching with the right investors.

Want your data room to reflect that readiness? See how Capwave AI can support your next raise.

Introduction

Launching a startup is an exhilarating journey filled with ambition and innovation. However, statistics reveal a sobering reality: approximately 95% of startups fail. Understanding the reasons behind these failures is crucial for aspiring entrepreneurs aiming to beat the odds. This article delves into the common pitfalls that lead to startup failures and offers actionable strategies to navigate these challenges effectively.

The top reasons startups fail

1. Lack of market need

A significant number of startups falter because they develop products or services without a clear market demand. According to CB Insights, “42% of startups fail due to a lack of market need for their offerings”. This underscores the importance of thorough market research and validation before product development.

Actionable strategy: Engage in customer discovery processes to understand the pain points and needs of your target audience. Utilize surveys, interviews, and MVP testing to validate your product-market fit.

2. Insufficient capital

Running out of cash is a common reason for startup failure. Many entrepreneurs underestimate the amount of funding required to reach profitability. Without adequate financial planning, startups may exhaust their resources before achieving sustainable revenue streams.

Actionable strategy: Develop a detailed financial plan that includes projected expenses, revenue forecasts, and funding requirements. Explore various funding options such as venture capital, angel investors, or crowdfunding to secure necessary capital. 

📊For a deeper dive into building smart financial projections, check out our guide on forecasting growth.

3. Poor team dynamics

A startup's success heavily relies on the strength and cohesion of its team. Conflicts, lack of experience, or misaligned visions among team members can derail progress. Building a team with complementary skills and a shared commitment is vital.

Actionable strategy: Invest time in recruiting individuals who not only possess the required skills but also align with the company's culture and values. Foster open communication and establish clear roles and responsibilities to enhance team collaboration.

📌 For a practical guide to building a startup team built for scale, read our post on structuring for growth.

4. Ineffective marketing

Even with a great product, startups can fail if they cannot effectively reach and engage their target audience. Neglecting marketing efforts or lacking a clear strategy can result in low visibility and poor customer acquisition.

Actionable strategy: Develop a comprehensive marketing plan that includes digital marketing, content creation, social media engagement, and SEO optimization. Regularly analyze marketing metrics to refine strategies and improve outreach.

5. Failure to pivot

The inability to adapt to market feedback or changing conditions can lead to a startup's downfall. Stubbornly sticking to an initial idea without considering necessary adjustments may result in missed opportunities.

Actionable strategy: Maintain flexibility in your business model and be open to pivoting based on customer feedback and market trends. Regularly assess your product's performance and be willing to make strategic changes when necessary

Conclusion

While the startup landscape is fraught with challenges, understanding the common reasons for failure can equip entrepreneurs with the knowledge to navigate obstacles effectively. By focusing on market needs, securing adequate funding, building strong teams, implementing effective marketing strategies, and remaining adaptable, startups can significantly increase their chances of success.

At Capwave.ai, we specialize in supporting early-stage founders through the fundraising journey. Our platform assists in crafting compelling pitch decks, connecting with aligned investors, and maintaining engagement through investor updates. Let us help you turn your startup vision into a thriving reality.

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Introduction

Raising pre-seed funding can feel like navigating uncharted waters. You're passionate about your idea, but without a product or traction, convincing investors is challenging. The good news? With a strategic approach, you can secure the capital needed to bring your vision to life.

1. Craft a compelling pitch deck

Your pitch deck is your startup's first impression. It should succinctly convey your vision, problem-solving approach, and market potential.

Key elements:

• Problem Statement: Clearly define the issue your startup addresses.
  
  
• Solution: Explain how your product or service solves the problem.
  
  
• Market Opportunity: Provide data on market size and growth potential. Explore this resource for further insights.
  
  
• Business Model: Outline how you plan to generate revenue.
  
  
• Team: Highlight the expertise and experience of your founding team.
  
  
• Financial Projections: Include realistic forecasts and funding requirements.
  
  

Remember, clarity and brevity are key. Investors often review numerous decks, so make yours stand out with a compelling narrative and clean design.

👉 Download Capwave’s free pitch deck template to get started faster. 

2. Identify and research potential investors

Not all investors are the right fit for your startup. Focus on those who have a history of investing in your industry or stage.

Steps to find the right investors:

• Leverage Networks: Use platforms like LinkedIn, Angel Capital Association, and Crunchbase to identify potential investors.
  
  
• Attend Events: Participate in startup events, pitch competitions, and networking meetups.
  
  
• Warm Introductions: Seek introductions through mutual connections.
• Choosing the Right Type of Funding: Before reaching out, make sure you know what type of capital best fits your stage and goals. Grants, SAFE rounds, venture capital, revenue based financing, etc. This article dives into that decision making process.
  
  
• Research: Understand each investor's portfolio, investment thesis, and recent activities.
  
  

Tailor your outreach to show alignment between your startup and the investor's interests.

🧭 With Capwave’s upcoming Founder Profile, you’ll stay top of mind with investors, keeping warm intros warm, even between fundraises.

3. Build early traction

Even at the pre-seed stage, demonstrating traction can significantly boost investor confidence.

Ways to show traction:

• Minimum Viable Product (MVP): Develop a basic version of your product to showcase functionality.
  
  
• User Feedback: Collect testimonials or usage data from early adopters.
  
  
• Partnerships: Establish collaborations that validate market interest.
  
  
• Waitlists or Sign-ups: Showcase demand through pre-launch sign-ups.
  
  

These indicators demonstrate market validation and reduce perceived risk for investors.

4. Maintain regular investor updates

Keep potential and existing investors warm with consistent updates. Capwave’s upcoming Founder Profile makes it easy with built-in investor update tools that help you stay top of mind and build trust over time.

Best practices for updates:

• Consistency: Send updates monthly or quarterly.
  
  
• Content: Share milestones, challenges, metrics, and future plans.
  
  
• Transparency: Be honest about setbacks and how you're addressing them.
  
  
• Engagement: Invite feedback and questions to foster dialogue.

Great storytelling isn’t just for your pitch it’s how you build long-term investor confidence. Regular communication shows professionalism and commitment, qualities investors value. This Architectural Digest piece offers surprising inspiration on how to craft a narrative that sticks.

📡 Stay connected without the back-and-forth with Capwave’s new Founder Profile. This helps you update investors effortlessly.

Conclusion

Securing pre-seed funding is a pivotal step in your startup journey. By crafting a compelling pitch, targeting the right investors, building early traction, and maintaining open communication, you position your startup for success.

At Capwave.ai, we specialize in helping early-stage founders navigate the fundraising landscape. From refining your pitch deck to connecting with aligned investors and managing updates, we're here to support your journey. Start building momentum with Capwave today.

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Raising capital early on can feel like a black box. You’re building fast, you’ve got the vision, but getting the right angel investors to back you? That’s a different kind of challenge. The reality is: most angels don’t invest because of the idea alone. They invest because of you, your progress, and your potential.

The good news? With a focused strategy, you can cut through the noise and get the right investors to lean in.

Understand what angel investors seek

Angel investors are typically high-net-worth individuals who invest personal capital into early-stage startups in exchange for equity. But the best angels offer more than just money. They bring experience, insight, and networks often from deep within your industry.

These are former founders, operators, or senior execs who understand your market and can open real doors.

• Strong founding team: Investors prioritize founders with relevant industry experience, a clear vision, and a strong execution strategy. A well rounded team with expertise in business development, technology, and operations is more likely to navigate challenges and scale the company.
  
  
• Innovative and disruptive ideas: Startups offering new technologies, unique business models, or creative fixes to longstanding problems are particularly attractive to angel investors.
  
  
• Early traction: Even modest traction, like early users, revenue, or partnerships, can be a strong signal. It shows there's a market for your solution and that you’re capable of building momentum. Demonstrating early product-market fit goes a long way.

Should you raise from angel investors?

Angel capital can be a great move early on but it depends on your goals, your raise size, and what kind of support you need.

Raise from angels if:

• You’re pre-seed or seed with a strong founding team and early momentum
  
  
• You’re raising $100K–$1M to build product, launch, or scale
  
  
• You want value beyond money like intros, mentorship, or industry expertise
  
  
• You’re not yet a fit for institutional VC
  

Think twice if:

• You’re raising a large round ($2M+), and need deep pocketed funds
  
  
• You already have growth and can skip straight to seed VCs
  
  
• You’re looking for passive capital with zero involvement
  

Angels can be high-impact partners, but they tend to be hands on - so be clear about what kind of support you want. If you’re looking for strategic involvement, angels can be incredible partners.

How to find Angel Investors 

Angel checks almost always stem from trust. And trust is built through warmth and visibility not cold emails.

• Attend relevant events: Founder dinners, pitch nights, and niche meetups work better than massive startup expos.
  
  
• Use smart platforms: Tools like Capwave, Angel Capital Association, or warm intro platforms give you targeted access to real investors.
  
  
• Get warm intros: Ask your advisors, early supporters, or even friendly VCs for intros to aligned angels.

Most angels invest in industries they understand. Match your outreach accordingly and always keep it personal.

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Make it easy for angels to say yes

1. Build a compelling pitch deck

Your pitch deck is your startup’s first impression. It doesn’t need to be flashy, it needs to be sharp, clear, and focused on what investors care about.

Your deck should cover:

• Problem: What’s broken, and for whom?
  
  
• Solution: How your product solves it, simply and effectively.
  
  
• Market: How big the opportunity is (and why now is the moment).
  
  
• Business Model: How you plan to make money.
  
  
• Traction: Any proof points like product usage, revenue, waitlists, feedback.
  
  
• Team: Why are you the team to solve this?
  
  
• Financials: Projections, burn, and high-level unit economics.
  
  
• The Ask: How much you’re raising, and what it funds.
  

🎯Ready to build your deck? Download our free investor ready pitch deck template.

2. Demonstrate traction and milestones

Traction doesn’t always mean revenue. It means forward momentum. Angels want to know you’re not just talking, you're building, testing, learning.

Investors want to see that your startup is making progress.

• Minimum Viable Product (MVP): Having an MVP or prototype can demonstrate your commitment and capability.
  
  
• Customer Feedback: Positive feedback or testimonials can validate your product's value.
  
  
• Revenue or User Growth: Even modest growth can indicate potential.

📈 Want to know what traction metrics matter most? Download our free guide to get investor-ready, faster. 

3. Be transparent and prepared

Transparency builds trust with potential investors.

• Legal and financial documents: Have your business registration, financial statements, and any legal documents ready.
  
  
• Contingency plans: Demonstrating that you've considered potential risks and have plans to address them can reassure investors.

You don't need perfect projections, but you do need a clear grasp of your numbers. 

Conclusion

Attracting angel investors isn’t about luck, it's about showing up with clarity, traction, and a story that resonates. When you combine a strong narrative with smart targeting and proof of momentum, you turn passive investors into active believers.

Capwave helps you get there.
We make it simple to craft investor-ready pitch decks, connect with aligned angels, and stay top-of-mind with polished updates so you can raise smarter, and get back to building.

💡 Ready to simplify your raise? Start with Capwave.

Raising capital is one of the most daunting tasks for any founder, and deciding whether to go for Seed or Series A funding only adds to the complexity. Should you go all in now, or take a more measured approach? With the pressure mounting, it’s crucial to understand the key differences between these two funding rounds and how they align with your company’s needs. Here’s what you need to know to make the best decision for your startup’s next chapter.

Seed Funding: The first step in building your vision

Seed funding is all about getting your business off the ground. It’s the initial fuel to transform your idea into something tangible. At this stage, investors are betting on your potential, your vision, your team, and your ability to execute.

Seed rounds can vary widely. According to Carta’s Q4 2024 State of Private Markets report, the median seed raise was $3.5M. That said, amounts typically range from $500K to upwards of $7M, depending on factors like traction, market demand, industry dynamics, and founder experience.

The focus at this stage is on proving your concept, refining your product, and building a customer base.

Key Points:

• Risk: High, you’re building with limited resources, unproven tration, and no safety net.
  
  
• Investors: Angel investors, venture capitalists, and accelerators.
  
  
• Milestones: Product development, initial traction, and proof of market fit.

Wondering if you’re pre-seed instead?

Pre-seed is all about proving the idea: customer discovery, early validation, and building your first version. Seed comes once you’ve shown signs of traction and need capital to grow what’s already working. If you’re still testing assumptions or haven’t launched yet, you’re likely in pre-seed territory.

Series A Funding: scaling your vision to the next level

Once you’ve proven that your business has potential, Series A funding helps you scale it. This round is for founders looking to accelerate growth, expand their teams, and solidify their market position. Investors expect to see proven traction and revenue growth, with a clearer path to profitability. Series A rounds are significantly larger, typically between $5M and $20M or more, depending on the industry. The median raise in 2024 was around $11.4M, according to Carta’s Q4 2024 report, though amounts can vary based on traction, market conditions, and business model.

Let me know if you want this formatted for a deck or social post too.

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Key Points:

• Risk: Lower compared to Seed, but still substantial.
  
  
• Investors: Venture capital firms and institutional investors.
  
  
• Milestones: Strong product-market fit, steady revenue, and scalability.
  
  

The critical differences: Seed vs. Series A

While both Seed and Series A are pivotal moments in your startup’s journey, the key differences lie in the stage of your business and the expectations of investors. Let’s break it down:

1. Funding Amounts: Seed is smaller and focuses on early-stage operations, while Series A provides the capital needed to scale and expand.
   
   
2. Investor Expectations: Seed investors focus on your team and vision, while Series A investors want clear evidence of growth and market traction.
   
   
3. Milestone Focus: Seed funding is about getting the product market fit, while Series A is about scaling up operations and refining the business model.

👉 Want to see real world examples?

Check out our breakdowns of 15 Seed-Stage Startups That Just Secured Funding (Q1 2025) and 15 Series A Startups That Just Secured Funding in Q1 2025 to get a feel for what’s resonating with investors right now.

What founders need to know before raising

Before choosing which route to take, ask yourself: What stage is your business in? Do you have a proven product with early users, or are you still in the testing phase? Understanding your company’s growth trajectory will help you decide which funding round is right for you. Pre-seed funding is typically focused on validating your idea and building the initial product. While seed funding comes slightly later, once you're starting to show traction and need capital to grow. 

Additionally, preparing for these rounds requires more than just financial readiness. You’ll need clear business metrics, a strong pitch, and a compelling story that shows how your startup is positioned for growth.

Final thoughts: ready to take the leap?

The decision between Seed and Series A funding can shape your startup’s future. Whether you’re just getting started or looking to scale, understanding the nuances of each round will help you make a smarter decision.

At Capwave, we simplify the fundraising process, giving founders the insights and tools needed to raise smarter and faster. Ready to raise your next round? Let’s talk about how Capwave can support your fundraising journey. 

👉 Looking for more guidance and next steps? Check out our comprehensive guide to securing startup funding. It is packed with practical tips to help you prepare, pitch, and close successfully.