Jul 3, 2025 · 1h 15m · news
Figma’s IPO: The Full Breakdown & Why Melio’s $2.5BN Acquisition is “Discouraging” · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings sits down with venture capitalists Jason Lemkin and Rory O'Driscoll to break down Figma's S-1 filing, debate the state of SaaS M&A, explore internal VC mechanics like reserve allocations, and analyze the massive disruption of generative AI on startup dynamics.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 17.6% of the talking time here. How this is scored →
Harry as informed peer 4.6 Guest teaching 4.6 Guest disagreement 3.1 Harry pushing back 3.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 24:47 Jason rejects Harry's framing on Melio
Jason aggressively counters Harry's premise that Melio's $2.5B sale was encouraging, calling it intimidating and crazy given their growth rate.
Hardest push from Harry ▶ 8:58 Harry challenges reserve decision decouplingHarry directly refuses Jason's positive take on separate reserve partners, arguing it lacks conviction and historical context.
Biggest teaching moment ▶ 21:24 Rory checks outcome extrapolationRory corrects Harry's assumption that future exits will reach a trillion dollars, explaining the error in linearly extrapolating cyclical step-functions.
Harry holds his own ▶ 1:11:48 Harry brings real Series A market dataHarry demonstrates real-time market mastery by detailing a live deal where valuation escalated from $25M to $600M for $5M ARR.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Analyzing Figma's Phenomenal S-1 Filing | 4 | 4 | 1 | 2 | Harry opens with precise figures from Figma's S-1 filing, including revenue, growth, and cash position. Rory extends the analysis by introducing rule-of-80 metrics and free cash flow margins, while Jason contextualizes the valuation relative to revenue multiples. | |
| The Orphaned Startup Dilemma and Partner Transitions | 6 | 5 | 5 | 6 | Harry presents a strong counterargument against decoupling partner reserve decisions, citing risk and internal conviction. Jason directly disagrees with Harry's framing, while Rory reframes Harry's fund data as seed-stage dynamics rather than Series B/C reality. | |
| The Reality of Pay-to-Play and Bridge Funding | 5 | 4 | 2 | 4 | Harry cites conversations with top VCs regarding pay-to-play downsides and presses on the opportunity cost of capital versus new investments. Rory and Jason share nuanced historical exceptions and founder emotional dynamics. | |
| The Return of Venture Liquidity and Fewer, Bigger Winners | 5 | 6 | 4 | 4 | Harry highlights firm return metrics and asks whether future outcome sizes will scale toward a trillion dollars. Rory rejects Harry's linear extrapolation, cautioning against treating cyclical venture trends ad infinitum. | |
| The Melio Acquisition: Deceleration or Low Multiples? | 5 | 7 | 7 | 5 | Harry frames Melio's acquisition as an encouraging sign for mid-tier exits. Jason aggressively rejects this framing, calling it discouraging due to Melio's high growth and low revenue multiple, prompting Harry to cite preference stack data to defend his point. | |
| The Dynamics of Founder Secondaries and Foie-Grasing Startups | 4 | 5 | 3 | 4 | Harry argues that founders are unfairly criticized for taking secondary liquidity during hyper-growth rounds. Rory corrects the hosts regarding legal co-sale rights and teases both of them about sounding punchy. | |
| AI Talent Incentives, Massive CapEx, and Fundraising | 5 | 6 | 4 | 5 | Harry questions AI talent incentives and defends massive AI CapEx relative to big tech market caps. Rory counters that market cap proportionality is game theory reframe rather than standard NPV economic rationality. | |
| PE Buyouts, Rollups, and the Subscale SaaS Liquidity Dilemma | 5 | 5 | 4 | 4 | Harry uses Couchbase metrics to ask if PE buyouts will absorb subscale SaaS, and proposes a Bending Spoons aggregator model. Rory and Jason treat Couchbase as a specific thematic bet rather than an industry-wide bailout trend. | |
| AI Adaptation: Legacy Rebuilding vs. AI-Native Startups | 5 | 4 | 3 | 4 | Harry argues that AI-native startups possess overwhelming speed advantages over incumbent software platforms. Jason provides counterexamples like vLex and Oracle to demonstrate that legacy companies can execute rapid AI pivots. | |
| The Rise of Surge AI and the Training Data Market | 4 | 5 | 5 | 2 | Harry raises the emergence of Surge AI following the Scale deal. Jason criticizes the venture ecosystem for ignoring a bootstrapped billion-dollar competitor while live-reading Surge's minimal website. | |
| The Rise of Executive and Founder Turnover | 4 | 4 | 1 | 1 | Harry highlights high-profile executive moves like LaunchDarkly's CEO shifting to Asana. Rory and Jason explain how lengthened startup exit timelines drive founder fatigue and executive transitions. | |
| The Winner-Take-Most Tech Economy and VC Portfolio Dynamics | 6 | 2 | 1 | 1 | Harry illustrates extreme power-law pricing by sharing data from a recent Series A deal that surged from a $25 million to $600 million valuation for $5 million in ARR. The guests concur with Harry's assessment of market behavior. | |
| Kalshi Quickfire: Tech and Political Market Predictions | 2 | 3 | 1 | 1 | Harry leads a lighthearted quickfire prediction segment covering political parties and founder wealth milestones, with Jason analyzing paper valuation logic. |
Statements from this episode (33)
Lemkin: Startups failing to grow through AI have already failed
“My rule is if you haven't grown because of AI, you've failed.”
O'Driscoll: Global AI CapEx has reached $300B to $400B annually
“The amount of money we're investing in AI right now are 300 to four hundred billion dollars a year in capex.”
O'Driscoll: Figma reached Rule of 80 with 40%+ free cash flow margins
“And you didn't even mention one of the more impressive ones, which is kind of the profitability and free cash flow margins last quarter, like, 40% plus. So, upping positive, free cash flow positive, growing 46%. So, again, rough math on an iPhone on a small sc…”
Lemkin: Adobe's $20B Figma acquisition would look like a great deal today
“You know, it also, you know, I mean, Scott Belsky was right. They should have bought him. People made fun of them for overpaying, right? Twenty billion, right? But I think the beauty is if you're Adobe, you can be a little patient. It's okay if you pay two yea…”
Lemkin: Founders selling to non-CEOs often outlast those corporate executives
“And then the life lesson for founders, it's tough is look, Scott's gone now. Right. It's always a weird thing when you do M&A and it's not with the CEO because there's a good chance you outlast them.”
O'Driscoll: VC board members who leave their firm are practically useless
“Cause I'm realistic enough to say that even if I, you know, if you have a venture board member who is an amazing board member, but can no longer speak to the money. Because there's no longer at the vent, at that venture firm, then to a rounding error, they're …”
Stebbings: None of 20VC Fund I's early projected winners returned the fund
“When I did fund one, I put out my five top performers that would be fund returners after about an eight month deployment period. And none of those five are actual fund returners in any way. And the five that will be, I never had as the fund returners.”
Lemkin: Seed funds allocate reserves solely based on rapid growth metrics
“When you have limited reserves from a Cedar smaller fund, you put it all in your fastest growing companies. Like, a hundred fucking percent. There's only one criterion. Triple digits growth, you know, double digits per month, that's it.”
O'Driscoll: Hitting 2-year plans raises 5x return probability from 30% to 70%
“When I look back two years in, right, if they're at or within 25% of the on the right plan, you know, our probability of making a five X goes from 30% to 70%, right?”
O'Driscoll: Inspecting deal legal documents signals an impending VC loss
“When you find yourself going to look at the legal documents in a venture deal, you're probably on your way to losing money, right? So the minute you start down this road, you've made a mistake.”
Lemkin: Bailed out a struggling startup now generating over $300M ARR
“I remember a founder I had to completely bail out from fumes with more money than I had and that company's doing over three hundred million today.”
O'Driscoll: Fewer IPO winners stay private longer, yielding $2B+ returns for early VCs
“At the macro level, what's happening here is the fewer, bigger winners, comma, and it's what I always say to people, it's fewer, comma, bigger, comma, winners, right? You're seeing less winners, there's less IPOs, but because they've grown so much longer, they…”
O'Driscoll: Startup exit valuations will not keep expanding exponentially over the next decade
“I don't think you accept, I don't think just because the outcome here is thirty billion and it used to be one billion, the outcome, you know, 10 years from now is nine hundred billion. I just don't think the math works like that. I think there's been a step fu…”
O'Driscoll: Anthropic's burn dropped from $5B last year to $3B this year
“Seeing the, you know, the strong performance from Antropic in terms of top line growth, and then just looking at the burn, you know, five last year going to three this year.”
Lemkin: Melio's $2.5B acquisition multiple is intimidating for venture expectations
“I thought it was discouraging. What I mean is that Melio gets acquired for 2.5 billion... This is not the greatest multiple of all time, is it? That that that intimidates me that it's not a great multiple. I find it intimidating as an investor, actually, becau…”
Lemkin: Melio Sold for $2.5B At $153M ARR Growing 127%
“Melio gets acquired for 2.5 billion. Look, that's a lot of money by, you know, hopefully folks will watch this and mock me for like not thinking that's a lot of money. It's a lot of money. But guys, they're at one hundred and fifty three million in AR growing …”
O'Driscoll: Melio Raised at $4.5B Valuation in 2021 Before $2.5B Exit
“I think the interesting thing also about that one was that, you know, they'd raised a couple of rounds significantly above that in value. I think they'd raised in 21 two rounds, the last of which was four and a half billion, right?”
Stebbings: Melio Held $650M Total Preference Stack Prior to Sale
“The pref stack here was six 50. So it was six 50 total pref stack, and then the last round was four billion by GC”
O'Driscoll: 2021 investors will not block 1x M&A returns today
“If you're a founder stuck in that situation right now, no one who wrote a check in 20, 21 at four billion, if the company is underperforming, is going to stop a one X right now. They'll be like, they'll be grateful as could be.”
Stebbings: Holds significant Airtable equity after four portfolio company acquisitions
“I think I have more Airtable than anyone at eleven billion dollars because they've acquired about four of my companies.”
Lemkin: Founders buying Atherton mansions correlates almost 100% with revenue decline
“The massive patent Atherton is like almost a hundred percent correlation to decline in revenue. It's like, it's almost a one-to-one, I can't prove causation, but I can prove correlation almost one-to-one.”
O'Driscoll: Large financial windfalls reveal true motivations rather than demotivate founders
“I don't think large amounts of money necessarily demotivates People across the board. I think what large amounts of money do, it reveals what you really want to do.”
O'Driscoll: The tech industry will inevitably overinvest in AI CapEx
“At some point in the process, you will, we will become over invested because that's just what humans do when faced with this kind of opportunity, right?”
O'Driscoll: Private equity will not rescue subscale SaaS companies
“I don't think it's a, hey, every two hundred million dollar so-so infrastructure company with 16% growth is going to get hoovered up at 5.7 times. I think it's much more a thematic. I think this can be relevant in AI. They have a newer product that's growing m…”
Lemkin: Portfolio companies in PE acquisition range receive zero PE inbound
“This is such a small number, it's barely useful, other than anecdotally, but I have two portfolio companies That are kind of in that intersection where, where a tech company and a PE buyer might buy them. Right. And they both got mediocre M&A offers recently. …”
O'Driscoll: Subscale SaaS roll-ups will accelerate once sellers accept price drops
“I think you're gonna see a lot of it, right? I think that, you know, you had mentioned, is it Visma, which is the company that's going public in the UK, and we'll come back to that, but the aha prior to that is it's a roll-up of, you know, hundreds, literally …”
Stebbings: 20VC portfolio company will surpass Superhuman's 8-year revenue in 9 months
“We are in a company that is similar to superhuman that will be at More than their revenue in nine months for what it took them eight years to go to.”
Lemkin: Oracle closed a $30 billion annual deal with OpenAI
“Oracle just closed a thirty billion dollar a year deal with open AI, right? An extra thirty billion.”
Lemkin: 50% of Unicorn Capital Goes to $5B+ Companies
“Crunchbase did an article this week. There's no such thing as unicorns anymore, because forget about AI. Only the money goes to five billion and up. It's got to be five billion corns. Like, 50% of all the unicorn money is north of five billion.”
Lemkin: Public CEOs Privately Expect AI to Cut Half Their Staff
“That's what every CEO talks about behind closed doors of a public company. I, they say, I don't know, I need to reskill 20 to 30% of my people, but they really think I might not even need half.”
Stebbings: Cursor Is Raising Funding at Reported $28B Valuation
“I mean, Cursor are raising more money now, and I think it's a reported twenty eight billion dollars. Just going to your point on like the escape velocity that this 0.00001% have being so much more than ever before.”