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

September 16, 2022, 12:52 PM UTC
Dylan Field was 19 years old when he dropped out of Brown University with a Thiel fellowship in 2012 and started working on Figma.
David Paul Morris—Getty Images

About five years ago, Index Ventures general partner Danny Rimer and Greylock venture partner John Lilly took Figma’s founders out to lunch at the San Francisco Museum of Modern Art. 

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. 

Dylan Field was 19 years old when he dropped out of Brown University with a Thiel fellowship in 2012 and started working on Figma.
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
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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.


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