Some of these early investors, who provided seed money to the Mountain View search engine company years ago, will enjoy returns that rival the biggest ever seen in Silicon Valley. For some, every dollar they invested early on could reap between $150 and $400, according to venture capitalists.

"There are a lot of deals that have had high returns, but this would be among the best all time," said Dan Tompkins, managing general partner at Novus Ventures, a venture capital firm in Cupertino.

Since its founding in 1998, Google has blossomed into the Internet's leading search engine, fielding nearly 200 million queries a day. Many on Wall Street speak of the company in the same breath as EBay, Amazon.com and Yahoo, all of which have provided tremendous returns to early investors.

For most of its history, Google has resisted going public. But an obscure securities law that requires all companies with more than $10 million in assets and 500 shareholders to disclose their finances appears to be pushing the company to change tactics and file for an initial public offering this week.

Those who have the most to gain from Google's transformation into a publicly traded company are its employees, especially its two founders, Sergey Brin and Larry Page. The men, both in their early 30s, are believed to each own around 20 percent of the company, an unusually large amount, according to venture capitalists.

The company could raise about $2 billion from the offering, with a total market capitalization between $20 billion and $25 billion, experts say. In other words, Brin and Page could each be worth several billion dollars on paper, ranking them among the richest Americans.

Google advertises on its Web site that it awards stock options to many of its more than 1,000 employees. Some of those employees could be on the verge of becoming instant paper millionaires, mirroring the experiences of workers at tech firms Microsoft, Netscape and Yahoo before them. But the company also has a large number of contractors who do not get any shares, creating the potential for animosity.

"There's a two-class system -- the haves versus the have-nots," said someone close to Google's management who did not want to be identified. "That paper resentment turns very real once the IPO happens and the person in the next cubicle shows up in a Porsche Boxster or goes on vacation to Hawaii."

Schwarzenegger's link to Google is through the private investment fund led by Angel Investors, a firm founded by Ron Conway, a noted Silicon Valley venture capitalist. The fund, created in 1998 and subsequently closed to new investment, specialized in getting in on the ground floor of Internet start- ups.

The governor's stake in the Angel II fund is valued at between $100,001 and $1 million, according to his financial disclosure statement filed in December. How much actually is in Google is unclear because the fund invested in a number of other dot-coms.

Tiger Woods, Henry Kissinger and Shaquille O'Neal also are clients of Angel Investors and therefore own Google shares too, according to the New York Times.

However, many of the companies that Angel Investors invested in performed poorly or were sold at fire-sale prices. The governor and the other celebrity investors probably lost money overall, according to Bart Schachter, managing partner of the San Francisco venture capital firm Blueprint Ventures and an acquaintance of Conway.

"That fund was wiped out in a big way," he said. "So even if the return is 400 times the investment on a small amount, it barely covers the losses in the other companies.

But Schachter added, "Nobody is going to complain."

Conway's partner, Bob Bozeman, did not return a phone call seeking comment. The governor's money management firm, Main Street Advisers, also did not return a call.

Among those who are ripe to profit from Google going public are the venture capital firms Sequoia Capital and Kleiner Perkins Caufield & Byers. The two Silicon Valley companies invested a combined $25 million in Google in 1998 for an estimated 40 percent stake. Those investments now could be worth several billion dollars, venture capitalists agree.

Financiers from both firms now sit on Google's board of directors and probably own a big chunk of shares. They are Doerr, from Kleiner Perkins, and Michael Moritz, from Sequoia. William Randolph Hearst III, a partner at Kleiner Perkins, also is a board member of The Chronicle's parent firm, Hearst Corp.

Andy Bechtolsheim, a co-founder of Sun Microsystems, who gave Google's founders their first outside investment in 1998, also stands to win big. In a now-historic moment on the porch of a Stanford professor's house, he handed the two founders a check for $100,000 that couldn't be cashed immediately because Google didn't yet have a bank account.

Some local universities stand to get a big financial infusion as well.

Stanford, as the birthplace of Google, would reap the most immediate benefits. The Palo Alto campus already receives royalties from Google and also owns some of its stock.

Google's founders developed the technology for their search engine while doctoral candidates at Stanford beginning in 1996. As a consequence, Stanford owns two-thirds of the technology, and Google must pay royalties to use it.

Stanford owns an undisclosed amount of Google stock as part of the deal, according to Linda Chao, a senior associate with the university's Office of Technology Licensing. Craig Zolan, chief executive of Techcense, which reports on the business of technology transfer, estimates that Stanford received 5 percent of Google's equity when it was formed. Even though the university's percentage stake may have been diluted by subsequent share allocations, Stanford's piece still could be worth as much as $250 million if the company goes public.

The UC system's ties to Google are through venture capital investments from its pension and endowment fund. The university has a $16 million stake in the Sequoia fund and a $20 million stake in the Kleiner fund, according to UC spokesman Trey Davis.

The amount invested in Google is minuscule compared with the $60 billion in total assets the university has under management. Those returns have been solid enough, Davis said, "that employees haven't needed to contribute to their pension fund for more than a dozen years."

Some of Google's partners also stand to hit the lottery, including Time Warner, which owns America Online. The company has warrants to buy 1.9 million Google shares for $22 million, according to company regulatory filings.

Yahoo, the Web portal, has invested $10 million in Google and warrants to buy 929,764 additional shares of stock, according to Yahoo regulatory filings. Yahoo used to use Google's search technology but dropped it after Google became too much of a rival.

Several individuals, institutions and companies stand to profit handsomely if Google debuts on Wall Street, as expected. Here's a few of Google's most prominent investors:

-- Gov. Arnold Schwarzenegger (owns a small stake as part of an investment of between $100,001 and $1 million in a venture capital fund that gave money to Google)

-- Stanford University (owned an estimated 5 percent of Google when it was founded)

-- UC Berkeley (has $36 million stake in two venture capital funds that are invested in Google)

-- Sequoia Capital and Kleiner Perkins Caufield & Byers (believed to own up to 40 percent, combined)

-- Andy Bechtolsheim, co-founder of Sun Microsystems (believed to own around 1 percent)

-- Sergey Brin and Larry Page, Google's founders (own up to 40 percent, combined)

-- Yahoo (invested $10 million in Google and has warrants to buy 929,764 shares)

-- Time Warner (has warrants to buy 1.9 million shares for $22 million)

Source: Chronicle Research

This story has been corrected since it appeared in print editions.

E-mail Verne Kopytoff at [email protected] and Dan Fost at [email protected].

This article appeared on page A - 1 of the San Francisco Chronicle