By Yuliya Chernova

The IPO of design-software company Figma should be a welcome reprieve for a venture market struggling to generate cash.

The San Francisco company priced its initial public offering at $33 a share on Wednesday, above the expected range of $30 to $32. That implies a market capitalization of about $19.8 billion on a fully diluted basis, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused ETFs. The company's shares surged in their trading debut Thursday on the New York Stock Exchange, more than tripling to $111.07 recently.

"Figma isn't just any VC-backed tech IPO. It is a behemoth. There's a very small list of VC-backed companies valued in the range of $20 billion," said Matt Kennedy, a senior strategist at Renaissance Capital.

That makes it the largest venture-backed IPO by market capitalization for a U.S. tech company since Rivian Automotive's debut in November 2021, according to research firm CB Insights. It's also the biggest venture-backed tech IPO since 2021 by the amount raised, or about $1.2 billion, according to Renaissance Capital.

Figma's IPO stands out in another way. Its venture investors, across stages, would be in the money.

That includes those who came in at the last primary financing round, a Series E with an issue price of $21.30, according to the company's regulatory filing. Durable Capital Partners led that round in June 2021 at a $10 billion valuation, according to research firm PitchBook Data.

The company also conducted a tender offer at $23.19 a share a year ago, per its S-1, where investors purchased stock from other shareholders, employees and former employees in a secondary transaction. Those who bought shares at that price would make it out in the black, as well, at IPO.

Figma's largest institutional shareholders are Index Ventures, with a pre-IPO stake of 16.8%, according to the company's S-1 and based on Class A shares owned. Index's holdings are worth $2.17 billion at the IPO price, followed by Greylock Partners' $2.03 billion, at 15.7%, pre-IPO; Kleiner Perkins' $1.82 billion, at 14%; and Sequoia Capital's $1.13 billion, at 8.7%. Top investors are offering some shares in the IPO.

Founded in 2012, Figma is led by Dylan Field, its co-founder and chief executive. The company has raised about $330 million in venture capital.

In late 2023, Figma's agreement to be acquired by Adobe for $20 billion fell apart because of a challenging regulatory environment.

Venture-backed tech companies have been struggling to clear the lofty valuation levels set in the hype of 2021. Many of the IPOs in the past two years have come in below that level, including those of Chime Financial, Reddit and ServiceTitan. Figma's ability to generate demand above its prior private valuation could inspire other candidates in the pipeline. Recent venture-backed tech IPOs have done well post listing overall, Kennedy said.

"This is a big deal because valuation is the number one thing holding back IPOs in the VC-backed tech space," Kennedy said. "For most unicorns, the challenge is getting the price they want. They raised money at enormous valuations in 2021 -- they don't want and don't need to take a down round," he added.

The venture market has been in a long dry period for more than three years now, where a dearth of IPOs and acquisitions has meant that capital is locked up for extended periods. That, in turn, has slowed fundraising and reduced startup investing. Venture investors and their limited partners are eager to see the flywheel spinning up again. So far this year, 15 U.S.-based venture-backed companies went public, not counting Figma, according to Renaissance Capital.

"Figma combines blazing-fast growth with strong Ebitda margins, so it's able to get that elite valuation multiple," Kennedy said. "Obviously, not every tech IPO can put up those numbers, but it's still an important milestone," he added.

There's a long list of private software companies that could be IPO candidates, including Canva, Databricks, Avalara and Rippling, Kennedy said. "A warm reception for Figma would likely encourage more software companies to tap public markets," he said.

Write to Yuliya Chernova at yuliya.chernova@wsj.com

(END) Dow Jones Newswires

July 31, 2025 14:25 ET (18:25 GMT)

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