The Adobe-Figma Deal Fallout: Why Figma Will Be Just Fine
When the $20 billion takeover of Figma by Adobe fell through, many assumed it was curtains for the online design company. But despite the high-profile failed acquisition, there are reasons to believe that Figma will emerge from this saga relatively unscathed – and even be ready to IPO in 2025.
The Breakup Fee: A Small Comfort
While a $1 billion termination fee from Adobe might seem like a nice consolation prize for Figma, it’s not the windfall some think it is. Spending over a year in regulatory limbo can take a toll on a company and its team. As VC Ed Sim noted on X, "Breakup fees aren’t the norm. Startups, you’re not getting a breakup fee unless it’s a sizable enough deal where there is antitrust risk."
Regulatory Risks: A Double-Edged Sword
In most cases, regulators are unlikely to get involved in M&As. However, when both parties know that regulatory approval is uncertain, even a $1 billion fee seems only fair compared to the uncertainty ahead.
Figma’s Silver Lining
It’s precisely how Figma sailed through this period of uncertainty that suggests it will come out of this saga relatively unscathed – and even be potentially ready to IPO in 2025. Let’s explore what went right for Figma during this tumultuous period.
Keeping Calm and Carrying On
Pending M&As often cause paralysis, but not always. In his blog post announcing the deal’s cancellation, Figma co-founder and CEO Dylan Field said he felt that the company "only continued to accelerate [its] pace over the past 15 months." As my colleague Ron Miller noted, Figma "hired 500 people since September 2022. What’s more, it has developed new capabilities, including tools aimed at developers and a generative AI layer on top of its popular FigJam whiteboard tool."
New Strategic Plans in Action
The company also executed new strategic plans during this period, Field recalled: Opening new hubs in the U.K. and Asia, hosting its Config conference in San Francisco, and even making an acquisition of its own: AI startup Diagram. That’s all well and good, but despite the current appetite for all things AI, these updates alone wouldn’t necessarily make the company nearly as valuable in the eyes of investors than at the hyped time of mid-2021 Series E round, when it was valued at around $10 billion.
Why Figma Still Holds Value
So why does CB Insights estimate that Figma is still worth between $8.3 billion and $9.4 billion? The answer lies in its financials. In 2022, Figma reported a revenue growth rate of over 100%, with a net loss of only $60 million.
The Power of Financials
Figma’s impressive revenue growth and relatively low net loss demonstrate the company’s ability to scale efficiently. This is a key factor in its valuation, as investors are willing to pay top dollar for companies that can maintain high growth rates while minimizing losses.
IPO on the Horizon?
If an acquisition is no longer in the cards, an IPO could very well be – maybe as early as 2025. With Figma’s strong financials and growing market presence, it’s not hard to imagine why investors would be eager to take the company public.
The Adobe-Figma deal fallout might have been a setback for one company, but it’s a testament to Figma’s resilience and adaptability. As we watch the company continue to grow and evolve, it’s clear that its future is brighter than ever.
Related Topics
- Adobe-Figma acquisition
- EC Market Analysis
- EC Newsletter
- Figma
- Mergers and Acquisitions
- Startups
- The Exchange
- Venture
About the Author
Anna Heim is a freelance reporter at TechCrunch, exploring SaaS and more. Former LATAM & Media Editor at The Next Web, startup founder and Sciences Po Paris alum.
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