After Adobe agrees to a $20B acquisition, Figma’s earliest investors detail the path to exit

Up until that point, co-founders Dylan Field and Evan Wallace had been heads down, consumed with building their product—a collaborative cloud-based design tool that has been described as the Google Docs of design. The two founders had even spent three years building their first iteration before making it available to users. But Rimer and Lilly thought it was time to start focusing on commercialization.

“We just said: Look—you guys are experts. You are amazing…at technology and product. But you’re nowhere in terms of how do you sell this thing to people,” Lilly says. Wallace, who Rimer says rarely spoke in board meetings, turned to Field and said it was time to make a shift, Rimer recalls. And shift they did. 

While Figma continued to roll out new product developments, such as multiplayer editing or team libraries, Field moved full focus into driving revenue, according to Rimer and Lilly. DropBox, HermanMiller, Spotify, Netflix, Microsoft, and Zoom would all utilize the company’s design software. Its initial success would draw eyeballs across the venture market and, in 2021, Figma would go on to raise $200 million in a Series E round that valued the company at $10 billion, making it one of the most valuable startups in the private market.

Now the company is worth twice that, as Adobe plans to scoop it up for $20 billion in cash and stock. It’s Adobe’s biggest deal ever, and one of the largest acquisitions of a subscription software company in history—not to mention during the early innings of the venture capital slowdown and for a 50x ARR multiple (Adobe projects Figma will surpass $400 million in total annual recurring revenue by the end of this year, it says). The transaction is expected to close in 2023, though it is still subject to required regulatory clearances and approvals.

The deal announcement is an enormous vote of confidence for Field (Wallace left the company in 2021). It’s also an exit of record for a slew of investors, ranging from angels like Semil Shah, who backed the company before he had launched his own fund Haystack, or LinkedIn Executive Chairman Jeff Weiner. Prominent venture capital firms like Andreessen Horowitz, Sequoia Capital, and Kleiner Perkins, have all backed the company. 

David Paul Morris—Getty Images

But, should the deal go through, two of the biggest winners will be Index Ventures, which joined every round until the most recent, and Greylock, which led the Series A and joined every round since. Neither firm would disclose the amount of capital they had invested into Figma over the course of time, although Rimer did specify that his original check in the seed round was for $3 million. Lilly said the return was “pretty good—good enough to eat out.”

Rimer and Lilly both individually sat down with me yesterday to talk about backing Figma and its sometimes bumpy trajectory up until this point.

How they met Field

Rimer was first introduced to Field during a Flipboard board meeting back in 2012. At the time, Field was merely an intern, and he made a presentation to the board. “I was impressed with his ability to synthesize a bunch of data,” Rimer says. Later, Rimer was grabbing dinner with LinkedIn then-CEO Weiner when Weiner told him about one of LinkedIn’s former interns who was building a new design product. “It turned out to be Dylan—again,” Rimer says.

“We were really impressed with the fact that these relatively young entrepreneurs, who were very green, were willing to dedicate the next three years of their lives to try and build a very significant piece of technology rather than do what most people in Silicon Valley would do, which was dedicate six months, iterate, see if it works…then decide whether to carry on or not. It was sort of the antithesis of the ethos of Silicon Valley when we met them,” Rimer says.

Lilly wasn’t sold so easily. He sat down with Field in a Starbucks near his home in Palo Alto. “He showed me this demo that he and Evan built,” Lilly says. “It was basically like a browser-based photo editing tool. And it was amazing.” But Lilly didn’t think it was a business, and said it was an “easy pass” for him. Nevertheless, the two kept in touch and would go get dinner every six weeks or so, Lilly says. When Field later approached him with the interface developer they had built, Lilly was convinced they might be onto something “totally transformative” and would go on to lead the Series A.

Growing pains

After a major acquisition announcement, it’s easy to look back at a company’s entire trajectory like a success story, but Rimer highlights that’s never the case.

“I mean now it sounds like—what a fantastic outcome; it was so up and to the right. That’s obviously not always the way it went,” Rimer says. Particularly in the early days, some of the older developers and designers on the team were very opinionated, got frustrated at Figma’s trajectory, and ended up quitting. Field, who started at the company when he was only 19, has “been learning on the job,” Rimer says.

Key hires along the way were Head of Community Claire Butler, Chief Customer Officer Amanda Kleha and Sho Kuwamoto, director of product. “Those have all been key inflection points for the business,” Lilly says.

Why an acquisition?

Figma started discussions about what an acquisition would look like in the Spring, according to Rimer. The company was “well on its way to…go public,” he says, and the company wasn’t tapping into its balance sheet. 

So why not go public?

“The thinking of the team and the folks around the board was that this was going to be a better company together with Adobe,” Rimer says, and Field’s original 19-year-old vision of making design tools available to everyone and creating a design community would be achieved faster.

For Rimer, yesterday was bittersweet. In one regard, it was a major win. Rimer says he and his wife had a “really nice glass of champagne” and that people called to congratulate him that he hadn’t spoken with in 20 years. But it’s also the end of something, he says. Even as the company got bigger, he and Field still talked on the phone biweekly, he says.

“This team is so fantastic,” he says. “And we’ve been so close to them that I would really be bummed if it stopped here.”

Until Monday,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Correction: A previous version of this newsletter incorrectly referred to Index Ventures as Index Partners.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Fortanix, a Mountain View, Calif.-based multi-cloud security company, raised $90 million in Series C funding. GS Growth, the growth equity business within Goldman Sachs Asset Management, led the round and was joined by investors including GiantLeap Capital, Foundation Capital, Intel Capital, Neotribe Ventures, and In-Q-Tel. 

- ZwitterCo, a Woburn, Mass.-based membrane technology company, raised $33 million in Series A funding led by DCVC. 

- MAJORITY, a Miami-based mobile banking platform for migrants in the U.S., raised $30 million in Series B funding. Valar and Heartcore Capital invested in the round.  

- Polywork, a New York-based work collaboration network, raised $28 million in Series B funding. Former GitHub CEO Nat Friedman and Caffeinated Capital led the round and were joined by investors including Andreessen Horowitz, Baron Davis, Bungalow Capital, and others.  

- groundcover, a Tel Aviv, Israel-based application monitoring platform, raised $20 million in Series A funding. Zeev Ventures led the round and was joined by investors including Angular Ventures, Heavybit, and Jibe Ventures.

- Next Level Burger, a Bend, Ore.-based plant-based burger joint chain, raised $20 million in funding. Whole Foods led the round and was joined by investors Alex Payne and Nicole Brodeur. 

- Gameto, a Madrid and New York-based cell engineering biotech for diseases of the female reproductive system, raised an additional $17 million in funding. Insight Partners, Future Ventures, Arcadia Investment Partners, Bold Capital Partners, Plum Alley, Myelin VC, TA Ventures, Gaingels, Korify Capital, and others invested in the round.

- Magna, a New York-based token management platform, raised $15.2 million in seed funding. Tiger Global and Tusk Venture Partners led the round and were joined by investors including Circle Ventures, Galaxy Digital, Asymmetric, Alchemy Ventures, Solana Ventures, Ava Labs, Polygon, Protocol Labs, Y Combinator Continuity, Blockchain Founders Fund, AV Blockchain Fund, Olive Tree Capital, ProtoFund, and Plug and Play Ventures.

- Rephrase.ai, a San Francisco-based synthetic media production platform, raised $10.6 million in Series A Funding. Red Ventures led the round and was joined by investors including Silverlake and 8VC.

- Leoparda Electric, a São Paulo, Brazil-based electric motorcycles and batteries company, raised $8.5 million in funding. Monashees and Construct Capital led the round and were joined by investors including Claure Capital, Auteco, K50 Ventures, Climate Capital, and other angels. 

- Myna Swap, a Los Angeles-based online trading and vaulting platform for sneakers, sports cards, and watches, raised $6 million in seed funding. Blizzard the Avalanche Fund, Citizen X, Polygon Studios, Madison Paige Ventures, AAF Management, Spartan Capital, Wave Financial, BluePointe Capital, Eileses Capital, Odell Beckham Jr., and Kyler Murray.

- xtype, a Tel Aviv, Israel-based software delivery platform for ServiceNow, raised $5.8 million in seed funding. Columbia Capital led the round and was joined by investors including Inner Loop Capital and SaaS Ventures. 

- Arpeggi Labs, a San Francisco-based Web3 music creation and publishing platform, raised $5.1 million in seed funding. a16z crypto led the round and was joined by investors including 1confirmation, Palm Tree Crew, WndrCo Ventures, Steve Aoki, 3LAU, Wyclef Jean, Disco Fries, Electric Feel Ventures, and others. 

- MVP Match, a Berlin-based tech hiring platform, raised €5 million ($5 million) in seed funding led by Stage 2 Capital.

- Transaera, a Boston-based air conditioning company, raised $4.5 million in seed funding. Energy Impact Partners led the round and was joined by investors including Carrier Ventures, Saint Gobain, and MassCEC.   

- Nomono, a Trondheim, Norway-based audio recording and collaboration tools developer, raised $3.6 million in funding led by Schibsted Ventures. 

- Carver Biosciences, a Boston-based CRISPR/Cas13 antivirals development company, raised $3 million in seed funding led by Khosla Ventures.

- ybot, a remote-based multilingual, voice-activated autonomous work assistant, raised $3 million in funding from Florida Funders. 

- Arbonics, a Tallinn, Estonia-based climate tech startup, raised €1.8 million ($1.8 million) in pre-seed funding. Wise co-founder Taavet Hinrikus and Plural invested in the round. 

- Enzee Health, a Colombus, Ohio-based compliance and quality measurement platform for patient care, raised $1.5 million in seed funding. Rev1 Ventures led the round and was joined by investors including Tamarind Hill, Harbor Street Ventures, M7 NEO, Redgrave Investments, Service Provider Capital, and others. 

- Insly, a London and Tallinn-based software platform for insurers, insurance brokers, and managing general agents, raised €1.1 million ($1.1 million) in  bridge funding. Concentric, Uniqa Ventures, and an angel syndicate led by Fund Fellow Founders invested in the round. 

PRIVATE EQUITY

- Belcan, backed by AE Industrial Partners, acquired RTM Consulting, a Cincinnati-based provider of consulting offerings including digital resource management, business optimization, digital transformation, professional education, and others to service businesses. Financial terms were not disclosed.

- Goldman Sachs and Cleanhill acquired a majority stake in EPC Power Corp, a Poway, Calif.-based smart inverters supplier. Financial terms were not disclosed.

- Norwest Venture Partners acquired a majority stake in Face Reality Skincare, a Danville, Calif.-based skincare brand. Financial terms were not disclosed. 

- Rockbridge Growth Equity acquired a minority stake in The Nest Schools, a Boca Raton, Fla.-based early childhood education operator. Financial terms were not disclosed.

EXITS

- Veritas Capital agreed to acquire Sequa, a Palm Beach Gardens, Fla.-based solutions provider for aircraft engines and gas turbines, from Carlyle. Financial terms were not disclosed. 

OTHER

- Adobe agreed to acquire Figma, a San Francisco-based collaborative web application for interface design, for $20 billion.

- Envoy acquired WorkSphere, a Seattle-based workplace management software company for hybrid offices. Financial terms were not disclosed. 

- Planful acquired Plannuh, a Boston-based cloud platform for marketing performance management. Financial terms were not disclosed. 

SPAC

- Lavoro, a São Paulo-based agricultural inputs retailer, agreed to go public via a merger with TPB Acquisition Corporation I, a SPAC. A deal would value the company at $1.2 billion.

PEOPLE

- MPE Partners, a Boston and Cleveland-based private equity firm, promoted Constantine Elefter to partner.