Iconiq Capital Teardown: One Of Silicon Valley’s Most Influential Investors Has Had A Very Good Month

On Oct. 6, 2016, Iconiq Capital saw two of its companies exit: Viv Labs and Coupa Software.

Iconiq Capital is a California-based multi-family office that is relatively new to the investment scene since it was only founded in 2011. With over $1.4B under its discretion as of 2014, according to reports, it was founded by Divesh Makan, formerly of Morgan Stanley and Goldman Sachs.

Iconiq has served as an investment vehicle for some of Silicon Valley’s most high-profile entrepreneurs. Notable clients include Facebook CEO Mark Zuckerberg, Facebook COO Sheryl Sandberg, Napster founder Sean Parker, and Twitter/ Square CEO Jack Dorsey, among other high net-worth individuals.

A factor that has likely benefited companies in Iconiq’s portfolio has been its post-investment support system, which provides access to an influential network, such as the names mentioned above. That has enabled Iconiq to invest in rounds to unicorns such as Uber, Flipkart, The Honest Company, and Apttus (where the fund was a Series A investor and has followed on through the Series D). Indeed, Iconiq has invested in 11 unicorn companies valued at or over $1B in the private markets, putting them in an elite class of investors with over 10 unicorns in their portfolios. This, despite Iconiq being founded just 5 years ago.

To date, the fund has only had two exits from disclosed investments, those of Viv Labs and Coupa Software mentioned above. But given its participation in funding rounds to notable companies, its ramped-up investment pace, and investments in new areas such as life sciences, we decided to dig into Iconiq’s investment strategy, co-investors, and exit history.

Notes on the analysis:

1. Where are the data & visualizations from? 100% of the visualizations and data you see in this teardown are directly from the CB Insights platform’s Investor Analytics tool.
2. What’s a Teardown?  A product teardown is the act of disassembling a product to understand its parts, functionality, etc. An investor teardown is analogous. We’re trying to understand a firm and what makes it tick by analyzing data around their financing strategy, investment thesis, exit history, investment syndicates, and more.

We’ll discuss trends and highlights in Iconiq Capital’s portfolio over the past few years by analyzing the following dimensions:

• Financing activity
• Deal size
• Exit activity
• Industry heatmap
• Financing by stage
• Investment syndicates

Financing Activity

Iconiq Capital has made the large majority of its investments to companies at the Series B and beyond. However, the fund has also made the occasional seed/Series A bet, often co-investing with Sequoia Capital. Modern Meadow‘s 2013 seed round and a second tranche of WeLab‘s Series A in 2015 were both co-invested with Sequoia.

Despite a slow start from 2011-2014, Iconiq Capital has been ramping up investment activity as of late. From 2011-2014, the fund only participated in 6 rounds. In 2016 the fund had already made that many investments by July, and averaged 2 deals per quarter between Q1’16 and Q3’16. Some of the firm’s notable recent deals include:

• Synthetic biology company Zymergen. Iconiq participated in their $130M Series B in October 2016 along with investors including Data Collective, Draper Fisher Jurvetson, and True Ventures. This represents Iconiq’s first life science investment to date.
• Revenue management tool Apttus. Iconiq last participated in a follow-on $88M Series D round in September 2016. This was Iconiq’s fourth investment in the company since their 2013 Series A round.
• Enterprise customer engagement platform Sprinklr. Iconiq participated in the company’s $105M Series F in July 2016. This was Iconiq’s third investment in the company since its 2014 Series D.
• Synthetic materials company Modern Meadow. Iconiq participated in Modern Meadow’s $40M Series B in June 2016. This was Iconiq’s second investment in the company since participating in a seed round in 2013.

Below is a graph of Iconiq Capital’s monthly investment participation (deals count, as well as the total funding from the rounds Iconiq participated in, taken from their profile on CB Insights).

Deal size

Iconiq Capital generally keeps the average size of the deals it participates in below $120M. However, the company has also participated in larger rounds. For example, the 2014 peak in deals size above is explained by the fund’s participation in Uber‘s $1.2B Series D and Flipkart‘s $700M Series H rounds.

Average deal size since 2014 has hovered under $100M. Due to two recent large late-stage deals, to Apttus and Sprinklr, average deal size in Q3’16 was up 30% over Q2’16. Below is a graph from the Investor Analytics tab on CB Insights that shows trends in average and median deal size for rounds involving Iconiq Capital.

Exit Activity

Iconiq Capital has had two exits since its founding in 2011, both of which occurred last week. Other companies in Iconiq’s portfolio that are in our Tech IPO Pipeline report or rumored to be nearing an exit are The Honest Company, Uber, Flipkart, Apttus, and Docusign.

• Stealth startup Viv Labs, founded by Siri creators Dag Kittlaus, Adam Cheyer, and Chris Brigham, builds virtual assistant software. It was acquired by Samsung for an undisclosed amount. Iconiq Capital was in Viv Labs relatively early, participating in a $12.5M Series B in February 2015. Viv had raised $30M prior to the acquisition.

“Samsung will drastically accelerate our vision. For us, the glaringly obvious advantage Samsung brings to our vision is scale.”

-Dag Kittlaus, co-founder, Viv Labs

• San Mateo, California-based Coupa, founded in 2006, is a cloud-based spend-management platform. Coupa went public at a $866M valuation. Iconiq was a Series G investor in Coupa.

Industry heatmap

Since 2011, the majority of Iconiq Capital’s investments have been focused in the internet services sector. However, their overall portfolio has diversified occasionally into industrial/food companies such as Modern Meadow, mobile-focused companies such as Uber, and software-centric companies such as Viv Labs. Within the internet sector, investments are split into software/services and e-commerce. The industry heatmaps below show deal and funding activity per industry for the time period indicated by the orange slider. The size of the box represents the number of deals and the shade of the blue represents total funding amount with darker shades indicating higher funding.

Within e-commerce, Iconiq’s investments were mainly follow-on and focused on multi-product deals such as The Honest Company and Flipkart. Within software, Iconiq has focused on customer relationship management, project management, and content management platforms.

Financing by stage

Over the past 3 years, just under two-thirds of Iconiq’s investments have been to late-stage Series D+ deals and over one-third to mid-stage Series B and C. Due to higher valuations and increasingly crowded cap tables, participating in such late stage deals often limits potential return on the investment. Notable exceptions to this strategy include participation in WeLab‘s and Apttus‘ Series A rounds and Modern Meadow‘s seed financing. Late-stage deals have been, on average, 3x larger than those to mid-stage companies.

Iconiq’s latest late-stage deals have been in Flipkart‘s $700M Series H, Coupa‘s $80M Series G, and DocuSign‘s $233M Series F. The table below gives details on the firm’s deals in each stage:

Investment Syndicates

Iconiq Capital shares the highest number of rounds with New York-based Tiger Global Management, having joint investments with the hedge fund in 8 separate deals to 4 companies.

TGM is also the firm most likely to invest after Iconiq. Mr. Makan’s alma maters Goldman Sachs and Morgan Stanley have also been investing in rounds after Iconiq, second only to TGM. Another notable trend is that Iconiq tends to invest just after Battery Ventures; it has done so in 11 deals to date.

Notes:

1. 100% of the visualizations in this Teardown are from Investor Analytics. No MS Excel necessary.
2. Visualizations are all interactive so you can click and see underlying transaction details.
3. Visit Iconiq Capital’s profile to check out these visualizations on your own.

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