Jawbone Gets $165 Million in Complex Down Round, as Sameer Samat Heads Back to Google

Jawbone, the San Francisco maker of activity trackers that has seen numerous ups and downs in its short history, has raised $165 million in new funding (up), even as its relatively new president Sameer Samat is leaving to rejoin Google (down).

A spokesperson confirmed the funding and departure when called by Re/code for comment.

Google also confirmed the hire. “We’re thrilled to welcome Sameer back home,” said a spokesperson. “He’s a talented executive who will be a perfect match for Google Play, an exciting and rapidly growing area for us.”

According to sources, the new investment is largely coming from the Kuwait Investment Authority in an all-equity deal (up). But, said several sources, it drops the valuation of the company by half to $1.5 billion (down) — ironically, its valuation in 2011.

The restructuring of the cap table — which is what this is, diluting investors not participating in the new round (down) — has an unusual twist in it. Despite a lower valuation, a larger pool of equity for employees has apparently eliminated losses in value of their shares (up).

You get the idea here.

The protection of employee stock is important at this juncture for Jawbone, but also for many other public and private tech companies that have seen their values decline recently after years of ever-escalating valuations.

So far, Jawbone has raised $1 billion, with a valuation as high as over $3 billion in previous transactions, which had all kinds of complex financial structures and liquidation preferences that gave some investors more value than others.

Meanwhile, as these valuations are rejiggered all over the sector, companies like Jawbone are facing increasing costs of holding on to talent.

Case in point: Samat, who left his post as head of commerce at Google in May to join Jawbone in a high-profile hire. His purview was huge — he was in charge of product and engineering, including product development, product management and business development, software engineering, design and product experience and the CTO org.

But the lure of Google — where he is going to work for Google Play head Jamie Rosenberg, handling product, engineering and user experience — and especially an enormous pay package that Jawbone cannot match, pulled Samat back. While Google would not comment, sources said it is paying up for talent it wants, sometimes in the tens of millions. That is obviously hard for startups — except for rocket ships like Uber — to contend with.

Also important, Samat has been a close colleague of new Google CEO Sundar Pichai. In fact, one of his first interviews at Google when he came on was with Pichai and he has been a mentor since.

In general, Pichai has been assembling a strong team of execs around him, and Google Play is considered an important growth area, which was apparently attractive to Samat too. A distant second to Apple in mobile revenue, Play is ramping up its digital media offerings.

Many inside Google believe the division can be another big business after search, something the company needs. Google offered a stat, noting that more than 1 billion people around the world use Google Play each month in 190 countries.

While he will remain an adviser to Jawbone, Samat’s departure is obviously not a good thing for that company. He has been critical in attempting to reorganize at Jawbone, as it has sought to compete in the difficult device space (see GoPro and Fitbit). It recently released several new activity trackers, including the Up3, which have had mixed reviews.

In Samat’s place, CEO and co-founder Hosain Rahman will take up some of the duties, as will CFO Jason Child, who arrived in June from Groupon.

While ever upward, Jawbone’s funding has also been rocky. In 2014, it had secured a commitment of $250 million from Rizvi Traverse Management. But Jawbone only received $25 million of that commitment, said sources. It then had to obtain a convertible note from BlackRock, which is essentially a $280 million loan secured by its valuable patents.

This has come as Jawbone’s board has shifted and gotten smaller. Samat will leave the board, and the company no longer has investor Vinod Khosla as a director, for example. Current board members include Rahman, Andreessen Horowitz’s Ben Horowitz and Yahoo CEO Marissa Mayer, who has troubles aplenty to deal with of her own. Sequoia Capital’s Roelof Botha is a board observer only.

But on the bright side, it now has $165 million in new funding from KIA, a long-term and stable investor, as well as some from existing investors such as Sequoia Capital. Interestingly, according to several sources, Samat is also personally investing in the round.

KIA has been upping its tech investments in Silicon Valley and also has significant money at work with a range of firms, such as TPG and BlackRock.

It will be interesting to see where Jawbone goes from here — it had once been thought that it might go public, although those waters are choppier than ever (see Twitter) for everyone. Meanwhile, the private market is also fraught (see Foursquare).

“It’s the beginning of the new future,” said one person about the new market realities that are likely to iterate across the tech landscape. “It may get ugly out there, but it is for the best to get companies with great prospects on better financial footing.”

This article originally appeared on Recode.net.