“Aghhh, how could I have missed this?” That was me on Friday, reading the headline: Robotics Startup Figure AI in Talks for New Funding at $39.5 Billion Valuation.

I had a chance to invest in Figure’s seed round in the spring of 2023 via a syndicate. I passed.

Again in the spring of 2024, I had a chance to invest, this time in their Series B. Yet again, I passed.

If that wasn’t bad enough, I had yet a third shot at this company recently. Some secondary shares came available via a syndicate. And yet again, I passed.

This incredible company was right in front of me and I blew it. Not once but 3 times!

I’ve been kicking myself all weekend.

So how the heck did I make such a big mistake? Let me take you through my thought process at the time…

What Was I Thinking?

When I first saw Figure in the spring of 2023, I was entranced.

I was so excited that I wrote about it on the blog. Since then, I’ve written about it 3 more times (one, two and three are linked here).

Shortly thereafter, I had an opportunity to invest in the seed round.

The founder, Brett Adcock, is incredible. His last company, Archer Aviation, is valued at $5.4 billion in the public markets.

But the price of Figure’s seed was extremely high for that stage. So, I thought there would be no upside.

At this time, the most valuable robotics company I could find was Boston Dynamics, at around $1 billion. Given the high price of Figure’s seed, I didn’t see much upside.

What’s more, I have no background in robotics and didn’t feel qualified to invest in it. I’ve only done software up to this point.

As for the other 2 opportunities to invest, the valuations were even higher. So, my concerns on upside were even more acute.

What I Got Wrong

What I didn’t realize was how big these robotics companies would get. Figure’s latest valuation is nearly 40 times that of Boston Dynamics.

What changed?

The ability to use Large Vision Models to direct a robot’s behavior lets them do way more than before. When I saw Figure’s seed round, no one had pulled it off yet.

Still, something like ChatGPT shoved into a Figure robot wasn’t impossible to imagine. But I failed to appreciate just how much this would drive the upside.

The fact that I wrote about the company over and over should’ve given me a sign: Francis, invest in this thing! As Paul Graham said:

“Curiosity is the best guide. Your curiosity never lies, and it knows more than you do about what’s worth paying attention to.”

And yes, I’m not really qualified to invest in robotics. But what the heck makes me qualified to do any of this?

4 years ago, I knew nothing about angel investing. I learned by doing.

Today, I’m planning on broadening out a bit and doing the occasional deep tech deal. In those deals, I’ll learn as I go, just like I have in the vanilla software deals I’ve done thus far.

It all comes back to this quote from Naval Ravikant:

“If I always did what I was qualified to do, I’d be pushing a broom somewhere.”

How Much Would I Have Made?

If I had gotten this right, I would be sitting on about $500,000 of paper gains on a $30,000 investment.

I typically put $5,000 into a seed round and $25,000 into the Series A. After considering dilution and fees to the syndicates, that $30,000 would have increased in value to around $500,000. And it would’ve taken less than 2 years.

So yeah, that stings.

Does Figure’s Valuation Make Sense?

Of course, that $500,000 would only exist on paper.

Given the huge increase in valuation, I’d want to sell 25% of my shares in secondary at this point. It’s good for me to trim my position over time. But, with the shares locked up in a syndicate, it would only be possible if the syndicate lead agreed.

Getting liquidity on that $500,000 would be tough.

Figure would need to IPO or get bought at that price or higher. For that to happen, the price would need to make sense to public markets or an acquirer.

Let’s give Figure a very generous 50x revenue multiple. At that level, they’d need $800 million a year in revenue to justify that valuation.

I don’t know what these robots cost, but let’s assume the first ones are pricey. Say, $100,000 each.

Figure would need to deploy 8,000 robots this year to justify their valuation under these assumptions. So far, all we have in terms of public information is that Figure is doing a pilot at one BMW plant in South Carolina. I don’t get the impression there are anywhere near 8,000 robots involved.

Of course, there may be a lot more going on that isn’t public information. But based on what we do know, the price seems like a major stretch at this point.

Figure may grow into the valuation. I really hope they do! I think the technology is absolutely awesome.

Wrap-Up

Getting so tantalizingly close to an incredible outcome is exciting. And blowing it gives me a sinking feeling in the pit of my stomach.

Here is the most critical thing I learned from this mistake: If I have a chance to back a founder who had a billion dollar exit when he starts his next company, take it. Ask no further questions.

I probably won’t understand what they’re doing. No big shocker there — these people are smarter than me.

The price will be high. Again, surprise surprise! I’m paying for that track record.

Just put a check into it. End of story.

Mistakes are inevitable, especially in venture capital. The future is hard to predict.

But I will not make this mistake again.

More on tech:

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