Figma Rebounds: Investors Hail Abandoned Adobe Deal as Catalyst for Innovation and IPO Success

Figma, a prominent design software company, is gearing up for a much-anticipated initial public offering (IPO) after the collapse of a $20 billion acquisition deal with Adobe in 2023. The antitrust backlash in the UK and EU, along with concerns from the design community about potential price hikes and slowed innovation, led Adobe to abandon the deal. Following the collapse, Figma received a $1 billion breakup fee, which became a pivotal moment for the company. Three investors, speaking to Business Insider during the quiet period before the IPO, expressed their belief that staying independent could prove more beneficial for Figma. One investor stated, "I always believed that the company had a chance to build a much bigger business than the Adobe deal." The failure of the acquisition reinvigorated Figma's innovation efforts, leading to the launch of four new products at its annual Config conference in May. These launches doubled Figma's product catalog, demonstrating a renewed focus on growth and development. The investor also noted that Figma's financial metrics have shown significant improvement since the deal's collapse, with the company continuing to expand its offerings and user base. Figma Make, a new tool that allows users to create prototypes and web apps through conversational prompts, is seen as a major step forward, aligning with CEO Dylan Field's vision to bridge the gap between imagination and reality using AI. Another investor pointed out that Figma's unique position as a stand-alone company, particularly its widespread adoption among 95% of Fortune 500 companies, gives it a significant competitive edge. Staying founder-led has been an advantage, fostering a culture of innovation and agility. The investor added, "Dylan's leadership and vision have been instrumental in Figma's resurgence and its path to becoming a public company." Despite the massive offer from Adobe, the investors generally agreed that the excitement and the ultimate goal were always for Figma to go public. During the Adobe acquisition talks, Figma experienced a period of uncertainty, which affected its hiring and product development strategies. The company was cautious not to step on Adobe's toes, potentially limiting its growth. Now, with the IPO on the horizon, Figma can focus on its own ambitious goals. Figma's IPO is generating substantial interest amid a recent pullback in the tech IPO market. However, companies like Chime, Circle, CoreWeave, and ServiceTitan have shown success with their recent offerings, indicating that there is still room for strong performance in the market. Figma's unique combination of robust product development, founder-led innovation, and a significant market presence positions it well for a successful public listing. Industry insiders view the collapse of the Adobe deal as a turning point that allowed Figma to capitalize on the emerging AI trend and maintain control over its destiny. The company's strong financial performance and continued innovation suggest that going public may indeed be the best Outcome for Figma and its stakeholders. As a stand-alone entity, Figma can pursue its vision more freely, making full use of AI to enhance its design tools and further revolutionize the industry.