Iconiq VCS Holds Stake in Chime Despite Two-Year Sale Process

Chime's Public Debut: A Win for Silicon Valley Investors

The financial technology sector witnessed a significant event on Thursday as neobank Chime successfully completed its initial public offering (IPO). The company generated $864 million through the sale of shares priced at $27 each, experiencing a substantial increase upon opening at $43.

IPO Scale and Investor Landscape

While not the largest IPO of the year – CoreWeave, for example, secured $1.5 billion in March with a debut market capitalization around $14 billion – Chime’s investor base represents a prominent collection of Silicon Valley firms. Many are openly acknowledging the success of this portfolio company.

Among these investors is Yoonkee Sull of Iconiq. He, alongside venture partner Greg Stanger, dedicated two years to observing and evaluating Chime before making an investment, as Sull revealed to TechCrunch.

Iconiq's Role and Portfolio

Iconiq is widely recognized within the Valley as a family office serving some of the industry’s wealthiest individuals, notably Mark Zuckerberg. Managing $80 billion in assets, its investment scope encompasses stocks, real estate, and venture capital.

Its diverse portfolio includes companies such as Benchling, Canva, Databricks, Glean, Notion, and Ramp. Iconiq’s investment presence is extensive; if a company is well-known, it’s likely Iconiq holds a stake.

Early Engagement with Chime's Founders

Sull explained that he and Stanger initially connected with Chime co-founders Chris Britt and Ryan King in 2017. Notably, the meeting took place at Chime’s offices, demonstrating Iconiq’s preference for proactively seeking out promising founders.

This engagement occurred just a year after a challenging 2016 for Chime, a period where the company faced a critical cash shortage. King reportedly received rejections from over 100 venture capitalists before receiving a lifeline.

A Turning Point and Future Investment

Lauren Kolodny, then at Aspect Ventures and now a co-founder of Acrew Capital, provided crucial support with a $9 million Series A extension round, effectively rescuing the company.

Sull emphasized that even in 2017, the founders’ vision was remarkably clear. Chime positions itself as a financial resource for everyday individuals and the working class – a contrast to Iconiq’s traditional wealth management clientele.

Over the subsequent two years, as the founders consistently delivered on their commitments, Iconiq became convinced to participate in Chime’s $200 million Series D round in 2019. Series D investors acquired shares at $5.22 each, as disclosed in Chime’s S-1 filings.

Competitive Landscape and Founder Focus

Sull noted that at the time of their 2019 investment, numerous competitors were pursuing similar concepts. Iconiq selected Chime due to the founders’ unwavering focus and resistance to distractions.

Subsequent funding rounds saw share prices increase: approximately $17 for Series E, $41 for Series F, and $69 for Series G, according to Chime’s disclosures. Consequently, not all previously held private shares have yet reached profitability.

Iconiq's Long-Term Perspective

Sull declined to reveal the specifics of Iconiq’s investment, citing its relatively small size. However, he affirmed that Iconiq intends to retain its shares and will not be participating in the IPO sell-off.

Existing shareholders, including employees, are subject to a standard 180-day lock-up period.

Industry-Wide Recognition

The successful IPO has been met with widespread acclaim from Chime’s backers. Shawn Carolan of Menlo Ventures highlighted the years of dedicated effort behind what might appear as an overnight success.

Cathay Innovation, which led Chime’s $15 million Series B round in 2017, capitalized on the IPO by selling 3.75 million shares from its 15.3 million share stake. Series B shares were initially priced at 47 cents, as Chime disclosed.

Correction: This article has been updated to rectify inaccuracies in the share price information for Series E, F, and G funding rounds.