The Unbundled Deal: How Windsurf Is Rewriting the M&A Playbook
PLUS: Former Eightfold Engineering Executive Building Something New
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Venture Radar
The Unbundled Deal: How Windsurf Is Rewriting the M&A Playbook
Cognition AI’s acquisition of Windsurf has introduced a new paradigm in technology M&A—particularly within the fast-moving world of AI infrastructure and developer tools. While not a headline-grabbing billion-dollar exit, the deal is strategically significant. It highlights how modern acquirers are increasingly navigating fragmented opportunities, where the value of a transaction lies not in the full-stack company, but in its discrete components—IP, product architecture, or market position.
Following Google’s partial acquihire of Windsurf’s leadership team and technical founders, Cognition stepped in to acquire the remaining assets—most notably, the product and underlying IP. This move illustrates a marked shift from traditional acquihire-driven deals, where teams were the primary asset and products secondary. In contrast, this transaction reflects a growing appreciation for residual IP value, especially in cases where technical infrastructure can be integrated into an existing product roadmap with minimal lift.
Another notable shift is the emergence of “partial M&A” or modular dealmaking. In this case, the company was effectively split—Google took the talent, while Cognition secured the IP. This suggests a growing comfort among strategic buyers to pursue targeted acquisitions that are more surgical in nature, rather than comprehensive buyouts. The ability to extract specific components of value from a company—whether team, tech stack, or market access—is becoming a viable and even preferred approach, especially in sectors like AI where speed, capability gaps, and model infrastructure matter more than legacy org charts.
The Windsurf deal also underscores the critical importance of timing and decisiveness. Cognition’s ability to act quickly—just days after OpenAI’s offer reportedly expired and Google made its move—signals that the most competitive acquirers today are those with the capital, internal alignment, and strategic clarity to move without hesitation. In a market where information travels fast and talent can be poached overnight, prolonged diligence cycles are increasingly a liability. The winners are those who can assess asymmetric value and move with conviction.
Lastly, this deal reflects a broader evolution in strategic M&A. After a cautious period in 2023, strategic acquirers are re-entering the market—but they’re doing so with far more precision. Acquisitions are no longer exploratory; they are outcome-driven, anchored to specific capability gaps, and often executed opportunistically. Rather than buying full platforms, buyers are assembling value across companies, geographies, and timing windows. This modularity in execution requires not only speed but also the ability to assess standalone asset value in real time.
The Windsurf acquisition may not go down as one of the largest AI deals of the year, but it exemplifies the kind of fast, focused, and fragmented dealmaking that increasingly defines the modern M&A landscape. As the AI arms race accelerates, so too does the need for a more dynamic, unbundled approach to acquisition strategy.
Geeks of the Week
Startup Name: ProSights
Geography: US
One-liner: AI-native workflow automation / search platform for financial institutions
Founder(s) Background: Consumer Tech PE / Growth Equity at Permira, PE at BayPine Capital.
Thoughts:
ProSights is building software aimed at a clear and underserved pain point in the investment world: extracting structured, usable data from the kinds of materials deal teams handle every day - PDFs, scanned pitch decks, financial reports, and fragmented Excel files. Rather than pitching a generic AI assistant, ProSights is positioning itself as an operational tool that saves time on repetitive, high-friction tasks like formatting outputs for IC memos, models, or slide decks. This kind of workflow automation - when done well - can create tangible value, especially in industries like private equity or banking where time and accuracy matter.
What makes the approach interesting is their focus on deeply vertical use cases. Most AI tooling still operates at the surface level - summarizing documents, generating content - but ProSights is going a layer deeper by trying to standardize how information moves through investment processes. Their early traction with firms like Clearlake and L Catterton suggests they’ve found a real wedge with operational deal teams. It’s still early, but if they can maintain product depth and keep delivering useful outputs that slot into existing workflows, there’s potential for stickiness across multiple segments in private markets.
Founder(s) building in stealth
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