Ex-Morgan Stanley bankers and Citadel engineers holding millions at Figma face an awkward six months
Much confusion surrounds the narrative of tech-giant Figma's blockbuster IPO. There are assertions that it was undervalued by bankers, and counterclaims that VCs accepted the low value to create a success story. There are also estimations for how much Figma's employees have made from the firm's initial 300% price surge, although, in reality, staff haven't necessarily made anything yet.
Figma employees face a lock-up of 180 days, where they can't sell the stock they've accrued while working there. They've missed the boat on Figma's $60bn valuation, though. Its market cap currently sits at $38.5bn, down ~46% from its brief peak.
Lock-ups are standard fare for IPOs, and The FT's Alphaville posits that the debut pop may actually help Figma's long term value; some companies like SailPoint debuted closer to their 'true' value and are currently trading below that debut price. The fact that only 7% of share capital was up for grabs as part of the IPO implies that VCs hold a similar view that Figma's price will still be healthy long-term.
Nonetheless, it will be a nervy wait for employees of Figma until the lock-up expires. Early stage employees who joined before 2019 will likely be happy with the value regardless. Figma's valuation was less than $1bn six years ago, so wild returns are almost guaranteed. Hires as recent as 2021 will also make returns on their stock payments, albeit far smaller ones. Figma was valued at $9bn in 2021, meaning stock issued that year is now just over 4x its initial value. That's still impressive, but not the kind of wild returns people dream of when joining startups, and it could go further down in the months to come.
Many of Figma's more recent hires have backgrounds in banking and finance. Alicia Xiong, hired as a director of product in late 2021, was formerly a Morgan Stanley investment banking analyst in New York. Kate DeLeo-Joglekar joined in 2022 as an investor relations VP, having previously been a VP in Deutsche Bank's TMT equity capital markets division. Most of the time, hires had already left banking for a startup or buy-side firm before joining Figma; an exception is Rufaro Sithole, who joined its strategic finance team at the start of 2024, leaving Barclays, where she was an investment banking associate.
Engineers from finance have joined Figma too. Peng Wang, previously a software engineer in hedge fund Citadel's external data team, joined Figma in 2022. People who joined around that time still have the potential to make a lot of money; one Twitter user analyzed the compensation for an L2 engineer that joined in April 2022 and said his stock was worth $3.3m at the IPO peak. That stock would now be worth ~$1.8m. Ouch.
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