Jason M. Lemkin says Figma's IPO flopped when retail hype pushed the price to $100+ per share, well above what professionals thought fair. The stock settled around $35, roughly matching Adobe's rejected acquisition offer. Lemkin estimates founders lost 30-40% in value by turning down the deal.
Chapters
We can talk about Figma's definitely, maybe we should talk about, I just feel like it's a Debbie Downer. I mean, it was like, I mean, it was Figma IPO was so exciting, right? It was just, everyone was captivated by it almost beyond what it deserved, right? Almost at a consumer level, almost at a Google or Facebook level. And to be a broken IPO, at least for a while, it just, it's just a bummer for, I know we talked about it a little bit last week for just the feeling that liquidity was back and IPO was back. It's just a bummer. Maybe Bill Gurley thinks it's great because they got a good deal, but a super active IPO market is great for everyone from VC down to founder. It's just a big plus. Having a meh IPO market is not gonna help any of us.
[Speaker:JASON M. LEMKIN] I don't think it's meh. I mean, I think, look, I would argue that it goes back to what I said earlier, voting versus a weighing machine, right? The professionals all looked at the stock and said, we should transact at $35, which is roughly the same valuation Adobe offered 2 years ago, which totally makes sense. You generally bid forward a year or 2 in an M&A. And then all the retail madness took over and it was valued at 100 and something. And now over time, the voting stops and the weighing begins. And now it's pretty much priced exactly what they thought it was worth 6 months ago. I would argue it's, you know, in the end, the markets are efficient and it's a great outcome. Lighten up, everybody. It's $17, $18 billion market cap for an awesome company. Yeah, you're right. The process has been a bit of a Debbie Downer to your point, Jason M. Lemkin. But the intrinsic, again, intrinsic valuation wins out in the end. Capitalism works.
It is. It is a reminder, though, if you, if you turn down a deal, you better want it to go public because it's not just down from Adobe. You got to take in dilution and time value of money, right? I tried to write it up on Saster. I think it's like 30 or 40% lower than Adobe deal adjusted for time, dilution, and risk. 30 to 40% lower. It just would be nice if everyone could IPO next year that needs to IPO. And I'm not being facetious. It would be nice if the market was overheated. If it didn't quite make sense, if Figma was trading at twice its IPO price and it could actually lift some folks that were a layer below Figma. You know, it would be nice if folks at $200 growing 30% that are still in that second tier nominally, right, that we talked about right there. It'd be nice if they could calmly IPO next year with, with, with over-demand IPOs, oversubscribed IPOs, and just free up liquidity in our portfolios.
