July 31 (Reuters) – Design software firm Figma (FIG.N)
, opens new tab 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 (ADBE.O)
, opens new tab in December 2023.
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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.
The San Francisco, California-based startup and some of its existing investors sold 36.9 million shares in the offering.
Figma makes collaborative design software used to build websites, apps and digital products, and customers include streaming giant Netflix (NFLX.O)
, opens new tab, travel firm Airbnb (ABNB.O)
, opens new tab and language learning app Duolingo (DUOL.O)
“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.
AI RACE
Design software firms are racing to integrate generative-AI tools that automate tasks like image creation, layout suggestions and code generation, as companies jostling 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’re already investing heavily in AI and we plan to double down even more in this area. AI spend will potentially be a drag on our efficiency for several years,” Figma CEO Dylan Field in the IPO prospectus. “AI is also core to how design workflows will evolve going forward.”
The push 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.
Figma’s prominent backers include Silicon Valley venture capital giants Kleiner Perkins and Sequoia.
Its revenue surged 46% year-over-year to $228.2 million in the three months ended March 31.
For the full-year 2024, its revenue jumped 48% to $749.01 million. It posted a per share loss of $3.74 versus a profit of $1.62 in 2023.
It is common for high-growth startups to be unprofitable at the time of listing, but investors have turned more selective, placing greater focus on those with clear paths to profitability and sustainable growth.
Morgan Stanley, Goldman Sachs, Allen & Co and J.P. Morgan are the lead underwriters of the IPO.
Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila
Our Standards: The Thomson Reuters Trust Principles.
Manya reports on prominent publicly listed U.S. financial firms, including Wall Street’s biggest banks, card companies, asset managers, and fintechs. She also covers late-stage venture capital funding, initial public offerings on U.S. exchanges, and regulatory developments in the cryptocurrency industry. Her work appears in the finance, markets, business, and future of money sections of the Reuters website. A passionate reader, she loves books across genres, from classics to contemporary fiction. She holds an undergraduate degree in Political Science from the University of Delhi and a master’s in journalism from the Symbiosis Institute of Media and Communication.
Niket Nishant reports on breaking news and the quarterly earnings of Wall Street’s largest banks, card companies, financial technology upstarts and asset managers. He also covers the biggest IPOs on U.S. exchanges, and late-stage venture capital funding alongside news and regulatory developments in the cryptocurrency industry. His writing appears on the finance, business, markets and future of money sections of the website. He did his post-graduation from the Indian Institute of Journalism and New Media (IIJNM) in Bengaluru.
