Brennecke said they started working on Grounded before the Microsoft acquisition, after Pillars of Eternity II wrapped up (that game came out May 8, 2018). They put a small team to work on it after getting approval from Obsidian boss Feargus Urquhart. They got a prototype running, got some art, and everyone thought it was a good idea.
And Microsoft bought into it as well.
"They've been very supportive," he said. "They checked out the game, said keep working on it, it looks really cool. They were pleasantly surprised."