Coupang's Surprising VC Winners | Why Figma's CEO Sold A CryptoPunk For Millions

Forbes staff

Welcome to our second edition of Midas Touch, your weekly newsletter destination for exclusive insights, reporting and analysis from the world of venture capital and startup fundraising. I’m Alex Konrad, a senior editor at Forbes and the editor of the Midas List since 2014. I’m joined by venture capital reporter Becca Szkutak.

Last week we looked at Zapier's journey to a mostly bootstrapped $5 billion valuation, a husband-and-wife startup that increased their valuation 10x in eight months, growth for non-coastal VC funds, and caught up with billionaire investor Chris Sacca to talk unretirement, climate investing and much more.

In this issue, you’ll find interviews with two of Coupang's unlikeliest and most notable investors winners who made billions, the data on this year's SPACs, an unusually intentional early-stage cap table and Figma CEO Dylan Field's primer on NFTs and how he sold a digital avatar of an alien for $7.5 million. Let’s get going.

March 14, 2021

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In a sea of SPACs, you’re forgiven for missing the enormity of Coupang’s old-fashioned IPO on the New York Stock Exchange on Thursday. An e-commerce giant in South Korea, Coupang doesn’t operate in other markets, at least yet. But its numbers deserve attention: $12 billion in revenue in a pandemic-boosted 2020, $4.55 billion raised in the offering, making it the biggest IPO by an Asian company debuting in the U.S. since Alibaba, and a 42-year-old founder, Bom Kim, whose net worth momentarily swelled to $11 billion.

Closing trading on Friday with a market cap of $83 billion, Coupang is the kind of result investors dream of. Let’s look closely at two: a low-profile early-stage investor now up billions, and the later-stage woman investor who may have just made good on Masayoshi Son’s industry-dividing $100 billion power play with an eye-popping cash return.

Matthew Christensen, right, with parents Clayton Christensen and Christine Christensen in 2014. Steve Zak Photography/FilmMagic

Early-stage masterclass

Rose Park Advisors keeps a low profile. There are no articles about it. Its website is just a shell with an address and contact email. But check Coupang’s S-1, and you’ll find Rose Park owned 86.7 million shares at IPO –5.1%, a position worth $4.2 billion at Friday’s close. And you’ll find its managing partner, Matthew Christensen, has served on Coupang’s board of directors since 2010. But there isn't much publicly known about Christensen or his firm. So Midas Touch reached out.

Who they are: Christensen’s name is that Christensen: he cofounded Rose Park with his dad, the influential late academic and business guru Clayton Christensen, naming the firm after the neighborhood where the elder Christensen grew up in Salt Lake City. Founded to invest the family’s money in companies that fit Christensen’s famous framework for “disruptive innovation,” Rose Park initially invested family and friends’ assets, then took on limited partners, mostly family offices, over time. Rose Park’s fund is evergreen and registered more like a hedge fund, using “side pockets” a tactic from that world, to keep investors fairly staked to the bets made while they back the fund. Rose Park’s invested in public companies, like Netflix and Salesforce, and private ones, including HireVue and CircleUp, as well as several that have gone public, including Coupang and DocuSign.

“We’re allowed to invest in any type of security in any geography, any industry, any stage, but only when the investment thesis derives from my dad’s research,” Christensen says. “So if we thought something was really exciting for some other reasons, then we have to pass on those things.”

Inside the Coupang bet: Rose Park initially backed companies primarily through the Christensens’ Harvard Business School and MIT networks (the elder Christensen cofounded a company with MIT faculty and later taught at Harvard; the younger graduated from HBS in 2007 after playing basketball at Duke). Christensen says his father wasn’t leading investments, but a team of 10 supports him in doing diligence on deals that came in from sources looking for the Christensens’ stamp of “disruptive” approval. But Matt Christensen met Kim at Boston Consulting Group’s Boston office (another overlap with his father) where Kim and Matt were members of the same associate class.

When Kim founded a magazine for Harvard alumni called “02138” (the area code where the university’s based), Rose Park invested. When “02138” was acquired and wound down, Kim went to HBS. In their first chats about the idea for Coupang – originally intended as a Groupon for South Korea – Christensen says he told Kim to finish business school. By the third chat, he said “you’ve got to get out of here.” Rose Park invested off just a PowerPoint.

The lesson: Christensen concedes his evergreen structure likely benefited Rose Park in amassing, then holding, its large stake. Of Coupang’s success, he says Kim and his team outworked their competitors, incentivized employees by offering all of them equity and ignored the glamor or perks of startup life. “This entrepreneurship path is just way, way more work than it looks,” he says. Perhaps more importantly: Coupang was willing to test ideas, from cheap to expensive, and pivot when it made sense.

“The transition from marketplace to retail required a lot of pulling rabbits out of hats, an insane amount of work, thought and creativity,” Christensen says. “Rather than running as fast as you could and realizing there’s a brick wall there, and then kind of bouncing off the brick wall and taking a 90 degree turn to the right, it was more iterative, and tweaky along the way.”

The return: Christensen’s friendship with Kim wasn’t hurt by the fact that his dad spent his Mormon mission in South Korea, and he grew up eating traditional Korean dishes as part of his diet. When Kim rang the bell at the New York Stock Exchange, Christensen was the only outside board director in attendance. Rose Park hasn’t sold any of its shares, and has no urgency to do so.

A big bet pays off

SoftBank investor Lydia Jett poured $2.7 billion into Coupang. SoftBank

In terms of cash returns, it’s SoftBank – and its much questioned, controversial $100 billion Vision Fund – that’s made history with Coupang. There, investor Lydia Jett turned a combined $2.7 billion bet into 568.2 million shares, or about 33% of the company. It’s difficult to prove with no one standardized data set available, PitchBook and the National Venture Capital Association tell Midas Touch. But SoftBank’s stake in Coupang represents a profit of nearly $25 billion per Friday’s price. That’s not just almost certainly the largest cash-returning position for a woman startup investor – it’s one of the biggest for anyone, ever.

Inside the deal: SoftBank’s ecommerce investor expert since 2015, Jett initially invested in Coupang before the Vision Fund existed, as part of SoftBank Investment Advisers, after Kim pitched the firm on a lightweight marketplace competing with other players there like eBay (Amazon doesn’t have a presence there.) After folding that deal and her team into the Vision Fund, Jett evaluated a very different business in 2018. Diligence on Coupang the second time took nine months. But SoftBank’s $2 billion check then – for a large percentage of the company, given Coupang’s high capital needs and uncertainty around its shift to focus on owning its own logistics and fulfillment stack – built the massive position the firm held at IPO.

Sunrise for Masa: Last April, Forbes interviewed SoftBank founder Son for a cover story that looked at the Vision Fund and SoftBank’s strategy as the company faced unprecedented doubt. “Over the next few months, Son will find out if it’s sunset or sunrise,” we wrote. Coupang’s success makes the view much brighter for Son and co. “There’s no consensus in writing a $2.7 billion check,” says Jett. “But Masa was able to find conviction and be a deep supporter… he’s not someone who walks around the organization looking to clobber people for decisions that they’ve made. He’s someone who really wants to teach, and educate, and empower people.”

The lesson: Despite what VC peers might say, Jett maintains that SoftBank only rarely writes multi-billion-dollar checks (others she’s worked on include Flipkart and Fanatics). The most important criteria, she says, is the quality of management – an area where things epically went wrong with the deal that continues to hound SoftBank, WeWork. What Kim did right, Jett says, is focus on one initiative for Coupang at a time. SoftBank’s also learned that its outsized checks work better in certain places. “In Korea, we believed if we wrote a really large check, we could build something that was unmatched. That’s harder to do in markets with the depth of the U.S. and China,” she says. “So I’d do it again, absolutely. I would do it again, in the right market.”

Up And To The Right

Special Purpose Acquisition Companies, or SPACs, have been the soup du jour of the exit market over the last nine months. More than 59 companies went public via SPAC this year alone, prompting many companies to see the strategy as a quicker, easier path to liquidity than the traditional IPO. But the grass hasn’t really proven greener on the other, public, side. New data from financial firm AGC Partners shows that 79% of SPACs that went public since the beginning of 2021 are trading below where they were priced as of March 10, down 6% on average. Diving a little deeper, it seems some sectors may find it’s better to stay private in the months to come.

With long, capital-intensive R&D stages that can make a typical path to investment rocky, deeptech companies in areas like energy, electric and autonomous vehicles have all taken advantage of SPACs. Their performance has trailed their initial valuations, with auto tech companies going public via SPAC so far this year trading at an average of 7.75% below their original list price. Only two have traded higher than they debuted, Freyr, a lithium ion battery company, and EvGo, a charging tech company. Notably, neither is building a vehicle itself.

While cleantech companies have fared even worse, the two categories most notably bucking the trend at present are cybersecurity and defense and proptech. Proptech companies are up an average 16%; cybersecurity companies are up 13%, without a single company trading down.

Deal Dive

Five years ago, James Citron saw the power of technology to amplify a nonprofit’s reach firsthand when his former startup, Outspoken, helped Crisis Text Line set up its text messaging platform. The serial entrepreneur decided then and there that his next startup needed to find a way to utilize technology for good. So Citron founded Pledge, formerly known as Pledgeling, to take the friction out of donations by meeting people where they already are—online.

Pledge’s tech integrates across platforms like Zoom or Shopify to give users a way to donate or fundraise without leaving the page they’re shopping on, or the livestream they are watching on Twitch. Pledge has helped users raise millions of dollars for charities across more than 100 countries so far. With usage up during Covid-19 — highlights include processing 10 million donations through Shopify, and helping raise $150,000 over Clubhouse in February for disaster relief following Texas’ winter storms — Citron had options when it came to raising his next financing. To ensure his cap table would match his startup’s mission, he took an unusual approach.

The requirements: In October, Citron set a list of criteria for the types of investors he wanted to bring into Pledge, rating them by commitment to the mission, ability to keep investing in future rounds, diversity, strategic connections, talent and influencer access and product and scaling expertise.

The group: Among investors Citron identified as mission- and impact-driven, he identified five institutional funds and one large family office that could support him long term, including Maven Ventures, Designer Fund, Mantis, the fund managed by The Chainsmokers, a fund managed by early Canva and Zoom investor Bill Tai, and former Facebook executive (and Zuck’s sister) Randi Zuckerberg. Maven, Designer Fund, Mantis and Tai aced Citron’s strategic metric; Mantis, unsurprisingly, its talent and influencer access. Zuckerberg, Designer Fund and Maven also shined with scaling expertise.

The results: Pledge’s $3 million seed extension led by Maven, joined by that group, brought gender diversity including 44.4% female investors, and 55.6% non-white. That aligns well with Pledge’s employee base, which is currently 53% identifying as female, and 40% identifying as non-white.

Next up: Pledge is launching a new feature with the funding, PledgeCam, which allows users to turn a Zoom call or Twitch livestream into a telethon with just a few clicks. “We think every purchase and event in the future will have a fundraising portion to it and we want to be the platform for that,” says Citron.

Elevator Pitch

The moment Dylan Field changed his avatar in Clubhouse. @iDecentralized via Twitter

A Thiel Fellow turned unicorn CEO, Dylan Field is known in tech and design circles for his software startup Figma, which powers much of the visual design happening at companies like Airbnb, Slack and Twitter, but increasingly also non-tech companies like several big banks. Backed by a who’s who of investors including Andreessen Horowitz, Founders Fund, Greylock, Index Ventures, Kleiner Perkins and Sequoia, Figma was valued at $2 billion last April.

This past week, Field has become known for a very different role: NFT collector. On Wednesday night, he sold a non-fungible token of a computer-generated face – an avatar of a pipe-smoking, hat and sunglasses-wearing teal alien – for the equivalent of about $7.5 million in Ethereum, the cryptocurrency. The sale was a record for CryptoPunks, the limited series of 10,000 collectible avatars created in 2017, and an eye-popping sum just hours before Beeple set an NFT sale record when his work “Everdays: The First 5,000 Days” sold for $69.3 million at Christie’s auction. Then on Friday night, Field took to Clubhouse, joining popular room “The Good Time Show” to compare his sold punk, called CryptoPunk #7804, to a digital Mona Lisa.

Midas Touch chatted with Field that morning and again on Saturday to get his download on NFTs and the sale. Highlights below:

The buy: Field purchased #7804 in January 2018, a year after Matt Hall and John Watkinson created the limited set of 10,000, which were initially given away for free. (The two came out of the Toronto-area university tech scene, as did Field’s now-wife Elena Nadolinski.) Already interested in cryptocurrencies and especially Ethereum, Field saw the buy as a potentially viable investment. But he was more excited to support activity happening over ETH, especially digital artists playing around on the blockchain. “I was on a road trip with Elena, and I said, this is probably the stupidest thing I’ve ever done. And I had total conviction in it, which is what I’m going tor try to listen to in the future: when I think something’s both really stupid and I have conviction, I think it’s a good sign now.”

The sale: After a month spent closely tracking a CryptoPunks Discord channel, Field sold on Wednesday to an anonymous investor known on Twitter as “Peruggia,” who tweeted a thread explaining the rational of their purchase on Friday (recommended reading in its own right). Field says the financial gain of the sale is meaningful to him, but he was also motivated by the desire to spread the gospel of crypto art through #7804, sharing it with more people through the subsequent publicity. He feels a deep bond to “Peruggia,” whoever they are. “Owning #7804 is a paradox and also a curse,” he said on “The Good Time Show.” What Fields means, he says: if you believe in NFTs or digital art like CryptoPunks, you’ll want to hype them and spread the word – which eventually means selling at an eye-popping value, to prove the point.

What’s next: Field sold another CryptoPunk, fedora-wearing ape #6965, for about $1.5 million in February, meaning of about $39,000 invested, Field’s sitting on profits of about $9.5 million. He still owns 11 CryptoPunks, though they’re not as rare as the pipe-smoking alien, as well as several works by Beeple and by the creators of CryptoPunks in a newer project, Autoglyphs. Field thinks that one might prove cooler, as it’s an experiment in generative art, meaning each glyph was generated by code running on the Ethereum blockchain itself. List prices for those already run more than $100,000 in ETH. Figma fans needn’t worry, though: Field says that while he plans to keep supporting creatives and the crypto community’s mission, he’s not going to quit his day job to trade NFTs full-time.

This whole topic, Field agrees, is a rabbit hole. More insights to come from him later this week on Forbes.com.

Party Round

Our top stories and favorite reads from the week in VC.

Josh Kushner, photographed here for Forbes in 2017, leads our VC stories of the week. Jamel Toppin/The Forbes Collection

Josh Kushner has built Thrive Capital into a top VC firm under the shadow of his brother Jared’s association with Donald Trump. Will the younger Kushner brother now be able to fully… thrive? We don’t have answers yet, but Michael de la Merced aptly raises the question. (The New York Times) — AK

The celebritization of SPACs is starting to make the SEC nervous as it increasingly looks like it has another GameStop situation on its hands. The government entity may look to tighten up the rules as the longevity of this exit trend still remains unclear. (Axios) — BS

Tiger Global feels like it’s everywhere. The firm, which speaks more through its money than in interviews, won big in Roblox, too. (Institutional Investor) — AK

Don’t rest on the Midwest. Indy-based High Alpha broke its own record for the largest VC fund raised in Indiana showing that you don’t need a Sand Hill Road address to raise serious capital. (Forbes) — BS

Another day, another cybersecurity unicorn. Israel and Massachusetts-based Aqua Security is the latest to hit a billion valuation, the third this year, as the need for cybersecurity solutions only grows. (BostInno) — BS

SoftBank anchors Sao Paulo-based Volpe Capital’s debut venture fund as the behemoth money manager looks to deploy $1 billion in the increasingly hot LatAm market this year. (TechCrunch) — BS

In case you missed it: here’s Zapier CEO Wade Foster on how he reached a $5 billion valuation while avoiding the VC “hamster wheel.” (Forbes) — AK

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Coupang's Surprising VC Winners | Why Figma's CEO Sold A CryptoPunk For Millions | Are SPACs Slipping?

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