iconiq's Will Griffith on Figma's IPO and Investor Sell-Off

Iconiq's Early Investment in Figma: A Remarkable Success Story

Will Griffith, a venture investor at Iconiq, encountered Dylan Field, a 19-year-old college student who had left his studies, just two months into his role. This encounter ultimately led to a pivotal seed investment in a company known as Figma.

Figma's Public Debut and Market Impact

On Thursday, Figma launched its initial public offering (IPO), witnessing a significant surge in its stock price. The stock climbed from the $33 IPO price to close at $115.50, resulting in a substantial $47 billion market capitalization. Griffith expressed considerable enthusiasm regarding the company’s performance.

“Attending a user conference reveals a dedicated community; approximately 15,000 attendees, with 5,000 proudly displaying Figma tattoos,” Griffith noted. The company’s founders, from the outset, demonstrated “a strong commitment to achieving success, innovation, and reshaping the design landscape.”

Early Days and Initial Challenges

In 2013, during their initial meeting, co-founders Dylan Field and Evan Wallace were relatively unknown entities. Simultaneously, Iconiq was also establishing itself as a discreet wealth management firm catering to Silicon Valley’s wealthiest individuals, including Mark Zuckerberg and Jack Dorsey.

Figma benefited from an early advocate in Jeff Weiner, then CEO of LinkedIn, where Field had previously interned. Weiner, an angel investor who later increased his stake, facilitated an introduction between Field and Griffith.

The Initial Investment and Vision

“Our connection to Figma occurred before the establishment of our early fund, prior to any formal venture fund,” Griffith explained to TechCrunch. He recalled visiting the founders, describing a modest setup. “It was essentially two individuals and a dog operating from an apartment in Palo Alto, developing innovative graphics and design capabilities within a web browser.”

The demonstration showcased the manipulation of light during photo editing within a browser environment. This browser-based design software, leveraging WebGL technology, represented a groundbreaking advancement. At the time, Adobe held a dominant position in the graphics design market with its desktop-based software. “I initially considered the concept to be quite radical,” Griffith remembered.

Early Skepticism and a Pivotal Decision

The concept’s novelty led to initial skepticism; Alexis Ohanian, investing through Initialized, declined to invest in Figma after reviewing the product in 2016. He later acknowledged it as a significant missed opportunity in a recent tweet.

However, Griffith proceeded with an investment. Seed shares were priced at $0.0878 each, as disclosed in Figma’s S-1A filing. Griffith continued to invest in subsequent funding rounds, with the company raising approximately $332 million in venture capital by 2024, according to PitchBook estimates.

Continued Investment and IPO Impact

“We participated in the seed round, the Series A, and subsequent rounds. We also engaged in secondary transactions and made a more substantial investment last year,” Griffith stated.

While Iconiq’s ownership stake did not exceed 5%, triggering a public disclosure requirement, it was significant enough to warrant celebration within the firm.

A Unique IPO Structure

“We have a tradition of predicting the closing stock price on the first day of an IPO, with prizes awarded to those who come closest,” Griffith shared. “Rewards can include cash bonuses or even a trip to Hawaii.”

The IPO was unusual in that most of the shares sold originated from existing investors, including Field, rather than newly issued shares by the company.

“The willingness of existing investors to offer shares for sale is commendable, creating sufficient supply for the IPO,” he observed.

High Demand and Market Considerations

Figma’s IPO was reportedly 40 times oversubscribed, according to Bloomberg, indicating substantial investor demand.

Griffith explained that such high demand can present challenges. Larger institutional investors may avoid IPOs with limited share availability, potentially inflating prices and leading to an inaccurate valuation. Subsequent price declines could then result in artificial devaluation.

Long-Term Commitment and Future Outlook

Figma’s existing shareholders were hesitant to sell shares at the initial $33 price point. “Having supported this business since 2015 without selling any shares, we intend to be active buyers in the IPO,” Griffith confirmed.

Griffith emphasized that the IPO represents a milestone, not an endpoint, for Figma. “I first met Dylan when he was 19, and we established a partnership,” he said. He expressed pride in witnessing Field’s growth as CEO, while maintaining the company’s original vision, values, and authenticity.

He concluded by stating his intention to focus on identifying and supporting the next generation of founders.