Figma's 50x ARR Multiple & What it Means for Startup Fundraising
Tomasz TunguzVenture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Figma's 50x ARR Multiple & What it Means for Startup Fundraising
Today, Adobe announced its intention to acquire Figma for $20b, valuing the business at 50x current ARR, the highest multiple paid for any software company of scale. Congratulations to team Figma on building their impressive business. After the correction earlier this year, public valuation multiples had reset to those of 2017. That year, Cisco acquired AppDynamics for 17x trailing revenue. If we assume a company recognizes about 2/3 of its ARR as revenue, then I estimate the Adobe/Figma deal at roughly 75x trailing revenue. That’s not a bear market multiple. Doubly true when the median public company today is trading at 6.3x. Not too long before the public market correction, high-growth startups routinely commanded 100x ARR multiples. If an acquirer is willing to pay 50x, shouldn’t a VC be ready to buy shares at 100x at a much earlier stage? Doesn’t this acquisition reset the market price despite this year’s 70% correction? The answer is likely not. While Adobe’s acquisition may set a high-water mark, it’s a single transaction. The environment hasn’t changed much. Before this announcement, US venture-backed software M&A was tracking to its worst year since 2017, at about $7b, down from $71b last year. Public company multiples have floundered around 5-6x as a result of macroeconomic uncertainty. This week’s high inflation print damped recent public rallies. When modeling investment cases, VCs often use a basket of comparables - not a single transaction - to justify prices, even if that single transaction is a firecracker that lights up the entire night sky. |
Key phrases
Older messages
Your Customers' Profitability is Your Startup's Future Health
Monday, September 12, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Your Customers' Profitability is Your
Systematizing Go-To-Market Hiring
Thursday, September 8, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Systematizing Go-To-Market Hiring This chart holds
Web3 Users Are Just Like Web2 Users
Tuesday, September 6, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Web3 Users Are Just Like Web2 Users By my rough
200% NDR: What Does it Take to Achieve this Stellar Milestone?
Friday, September 2, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. 200% NDR: What Does it Take to Achieve this Stellar
Don't Look Now But Web3 Companies are Beginning to Trade Like their Web2 Counterparts
Tuesday, August 30, 2022
Tomasz Tunguz Venture Capitalist at Redpoint If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Don't Look Now But Web3 Companies are Beginning
You Might Also Like
Economic downturns don't hit evenly
Thursday, April 25, 2024
We analyse Q1 funding data for central eastern Europe, ex-JP Morgan and UiPath execs found startup and quantum computing startups to watch. View in browser Mindset Consulting flagship logo Good morning
68 new Shopify apps for you 🌟
Wednesday, April 24, 2024
New Shopify apps hand-picked for you 🙌 Week 16 Apr 15, 2024 - Apr 22, 2024 New Shopify apps hand-picked for you 🙌 What's New at Shopify? 🌱 Default layout update for Smart Grid Changed ⸱ POS ⸱ 6
Bamboo Metrics, Lune AI, and Danger
Wednesday, April 24, 2024
One API for IP, device & user risk insights BetaList BetaList Daily Bamboo Metrics Exclusive Perk Daily emails for your team's key metrics, progress and blockers Lune AI Language Tutor in Your
A Shift in LLM Marketing : The Rise of the B2B Model
Wednesday, April 24, 2024
Tomasz Tunguz Venture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. A Shift in LLM Marketing : The Rise of the B2B Model Snowflake
"so you made 1 cent per hour?"
Wednesday, April 24, 2024
Read time: 1 min, 22 sec On Jan. 7 2018 I made my first internet dollar: A whopping $3.32 I couldn't even buy myself lunch. What's even crazier... is on that same day, I got my paycheck (from
Founder Weekly - Issue 633
Wednesday, April 24, 2024
View this email in your browser Founder Weekly Welcome to issue 633 of Founder Weekly. Let's get straight to the links this week. General The Arc Product-Market Fit Framework This framework
Starting in ecommerce while still at a 9-5? Watch this video.
Wednesday, April 24, 2024
Free for 24 hours , In case you haven't seen this yet, here's a special replay of one of the most inspiring sessions from the Start Your E-commerce Business Summit. The wisdom and insights of
Nicolai Klemke — Switching Lanes: Physics PhD to Indie Hacker — The Bootstrapped Founder 314
Wednesday, April 24, 2024
Nicolai Klemke (@nicolaiklemke) is an Indie Hacker with a PhD in Physics. Talk about a career change!
The unspoken skill of finesse
Wednesday, April 24, 2024
What finesse looks like, why it matters, and how to develop it for yourself and your team ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
KnowledgeBase, PhotoDoc, and Copybase
Wednesday, April 24, 2024
The AI-Powered Copywriting Platform for Teams BetaList BetaList Daily KnowledgeBase Build help centers to provide customer self service PhotoDoc Effortlessly annotate, organize, and back up your parcel