Figma set to debut as blockbuster US IPO lifts revival hopes

CNA

2 days ago

Design software firm Figma will begin trading later on Thursday after raising $1.22 billion in a blowout U.S. float, setting the stage for a flurry of high-growth tech listings and strengthening a rebound in the IPO market.
The company, which priced the deal at $33, above an already raised range, secured a valuation of $19.34 billion, just shy of the $20 billion it was set to fetch in a scrapped buyout deal with industry giant Adobe in December 2023.
The U.S. initial public offerings market has bounced back after tariff-driven volatility briefly paused listings in April, putting 2025 on track to end a nearly three-year dry spell.
"Fast-growing software IPOs have been extremely rare during the past three years, so deals like this tend to get a lot of attention," said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.
"Because of this three-year bottleneck, tech IPO investors have been starved for new deals."
Recent tech IPOs have drawn strong investor interest and delivered solid post-listing gains, fueling optimism around new offerings from high-growth and AI-focused firms.
"From a private markets perspective, Figma's IPO is a bellwether event for the tech sector," said Derek Hernandez, senior analyst, emerging technology at PitchBook.
Figma makes collaborative design software used to build websites, apps and digital products, and customers include streaming giant Netflix, travel firm Airbnb and language learning app Duolingo.
Its prominent backers include Silicon Valley venture capital giants Kleiner Perkins and Sequoia.
"If you look at Figma's positioning around AI, and the ability to deliver massively improved experiences to its customers with AI, that was not obvious back in 2022," said Andrew Reed, a partner at Sequoia Capital and a board member of Figma.
Sequoia Capital first invested in Figma at $1.10 a share during the company's Series C round. With Figma pricing its IPO at $33 a share, Sequoia stands to make a significant return on its roughly $150 million investment, according to a source familiar with the matter.
AI RACE
Design software firms are racing to integrate generative-AI tools that automate tasks such as image creation, layout suggestions and code generation, as companies jostle to win enterprise clients and creative teams.
Figma, in its IPO filing, flagged intense competition, particularly from rapid AI adoption, as a potential headwind, warning it could cede market share.
"We've embedded different flavors of AI - both to lower the floor (and) allow more people to participate in the design process - while also raising the ceiling for individuals (and) for companies to be able to have even more high craft in what they're creating," said Chief Financial Officer Praveer Melwani.
The effort has accelerated since Adobe, Microsoft and others began rolling out AI features aimed at speeding up workflows and cutting costs.
"Software companies with a strong AI element to them seem to be assets that investors want to buy," said Will Braeutigam, U.S. capital markets transactions leader at Deloitte.
Figma, for its part, has rolled out several products built around AI as it looks to stay competitive and meet growing demand for automation in design workflows.
"If this company didn't have an AI strategy, it would not be seeing this level of demand," Renaissance Capital's Kennedy said.