Figma, Plaid And The Battle To Retain Talent At Almost-Exited Startups
With startup unicorns staying private longer, nearly-bought and near-IPO companies grapple with fluctuating valuations and employee equity comp.
How do you keep top talent at a startup that’s perpetually almost public?
It’s one thing when companies do pull off an IPO, or get acquired – the ecosystem expects that a number of people will enjoy their proceeds and move on, maybe to launch their own startups, or go back to company-building at earlier and smaller ones.
But in cycles like the current one, where the IPO window is still just barely cracked open and sales like Alphabet’s planned $32 billion acquisition of Wiz are few and far between, that process can look more like an intersection with a broken stop light.
The challenge is fascinating to me because its hurdles don’t just afflict struggling companies. Widely respected, more mature startups expected to eventually be healthy public companies can get knocked off the conveyor belt.
Two companies I profiled for Forbes in past years, Plaid and Figma, find themselves at different junctures of this in-between stage. Both companies were supposed to be banner acquisitions that fell through amidst regulatory scrutiny – Plaid’s $5.3 billion acquisition by Visa falling through in 2021; Figma’s $20 billion acquisition by Adobe called off in late 2023.
For Plaid, the deal already felt too cheap, as the company soared next to a $13.4 billion valuation; for Figma, a reset to its previous $10 billion valuation prompted it to boost employee equity packages and offer buyouts last January.
Now it’s Figma whose shares are back closer to its aborted sale price on secondary markets (where AI reigns, as we covered last week), as the company announced it had confidentially filed a draft S-1 with the SEC to go public. Plaid meanwhile, was taking a haircut on its valuation in a new funding round, to $6.1 billion, back closer to what Visa offered five-plus years ago. Plaid intends to go public eventually, cofounder and CEO Zach Perret has told The Financial Times; just not this year, at least.
Both situations present talent challenges. For Figma, a once-again looming exit could be the milestone that employees were holding out for before moving on. For Plaid, employees might feel their financial motivation stalling out with its share price.
Vested employees at later-stage tech startups are always ripe candidates to be enticed back to earlier-stage companies. But the dynamic has shifted as unicorns like Figma and Plaid stay in purgatory longer, says Nakul Mandan, founder and partner of Audacious Ventures, an early-stage VC firm that specializes in helping startups make key early employee hires.