Figma is considered to be the latest and perhaps the most high-profile tech company to hit the market, and Wall Street seems to desire more. After the latest rise in pricing this week and the $1 above the top of that range, Figma shares soared 250% in their first day on the New York Stock Exchange.
Even more so, investors admitted they had a lucky outcome. As Figma was supposed to get acquired by Adobe for $20 billion under an agreement between the two companies forged in 2022. Yet, as of the best year, the transaction collapsed after UK regulators said the tie-up would harm competition.
As of now, Figma is worth more than three times what Adobe was going to pay, closing on Thursday with a market cap of almost $68 billion.
Dylan Field, Figma’s CEO and co-founder, owns a stake worth $6 billion. One of Index Ventures' partners, Danny Rimer, and a Figma board member, wrote a few words regarding the failed acquisition from 2022, on Thursday, in a blog post, mentioning that the acquisition came with “intense pressure and a spotlight few founders ever face.”.
He also added, “Dylan remained his usual grounded, transparent self”. Rimer’s company first bet on Figma in 2013 and is the biggest shareholder, with $7.2 billion worth of stock in the company. “When the deal fell through a year later, he didn’t flinch. He turned the page and got right back to building.”
“In 2011, I met an 18-year-old intern at Flipboard, one of our portfolio companies. He’d been doing customer research—talking to users and trying to help the team gain product insight. His analysis was good, but what stood out to me was his energy. He was genuinely curious, bubbling with ideas, and clearly lit up by the potential of building something people might love,” he also added in the blog post about Dylan Field.
Figma’s offering raised $1.2 billion, having two two-thirds of the proceeds going to existing investors. Besides the small slug of stock, each venture firm sold at $33, the rest of their holdings are subject to a lock-up period, the rest of their holdings are subject to a lock-up period.
The majority of outstanding shares are locked up for 180 days, so big stock sales will probably not be happening until January.
After 2021, which was considered to be a record year as it saw 155 US venture-backed IPOs raise $60.4 billion, every year since has been relatively dismal, as the University of Florida finance professor Jay Ritter has studied. There were 13 such offerings in 2022, followed closely by 18 in 2023 and 30 in the last year, collectively raising $13.3 billion, Ritter’s data demonstrates.
The decrease followed the Federal Reserve’s aggressive rate-hiking campaign from 2022, meaning the slow crippling of inflation. As the low-growth environment grew into years two and three, venture firms faced increasing pressure to return cash to investors.
Even more so, earlier this year, the exit environment was still looking ominous. After President Donald Trump’s announcement of sweeping tariffs in April, companies including online lender Klarna and ticket marketplace StubHub delayed their IPO plans. The Nasdaq grew 10% in a week, as investors fretted over the potential of rising import costs and supply chain modifications.
However, Trump later came back with his threats, and the trade deals he’s landed have resulted in lower tariffs than previously feared.
Also worth mentioning is the fact that Lynn Martin, the president of NYSE, reported for CNBC that “Squawk on the Street” on Thursday that she thinks the Figma offering “will open the floodgates.”
Figma’s early investors and big financial winners all published glowing blog posts about Field, staying with the company since he started and dropped out of college in 2012. Greylock’s John Lilly also wrote in a post on Thursday that “Figma’s relentless focus on product, community, and craft has reshaped how the world designs”.
Kleiner Perkins led the $25 Series B that was announced in 2018. His holdings in the company are now worth $6 billion. “The product was still early, but the love from its small community of users was unmistakable,” wrote Kleiner partner Mamoon Hamid in a post after the IPO. “We were convinced that Figma had the potential to fundamentally reshape how digital products would be designed, and knew we had to be part of it.”
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