Figma's Highly Anticipated 2025 IPO: A Comprehensive Guide to Investing in the Future of Design

UPDATE [July 28, T-4]: Figma has raised the bidding range for its initial public offering (IPO) to $30–$32 per share, placing its corporate valuation at approximately $18.8 billion

Figma, the collaborative design powerhouse, is preparing for its highly anticipated Initial Public Offering (IPO), marking a significant event in the tech and investment world. As a Canadian investor myself, understanding the nuances of this offering, from its business fundamentals to market dynamics, is crucial. This comprehensive guide will break down everything you need to know to make an informed decision.

Figma plans to list its shares on the New York Stock Exchange (NYSE) under the ticker symbol "FIG". The company is targeting an IPO price of $25 to $28 per share and plans to sell 37 million Class A shares.

TLDR: Skip background, and scroll down to the key financial highlights for the start of the information relevant to the IPO

1. What Exactly is Figma? A Deep Dive into the Product and Company

Founded in 2012 by Dylan Field and Evan Wallace, Figma set out with a mission "to make design accessible to all". Their core offering is a collaborative web-based design platform that has revolutionized the design industry by enabling real-time collaboration directly in a web browser. The platform enables teams to create user interfaces, wireframes, prototypes, and design systems. It has become a key tool in digital product development, utilized by designers, developers, and marketers at major tech companies

Figma's platform has evolved significantly from a simple UI/UX design tool. It now offers a comprehensive suite of products that span the entire product development lifecycle:

• FigJam: An online whiteboarding tool for ideation, brainstorming, and rapid communication, now integrating AI for template generation and meeting summaries.

• Figma Slides: For collaboratively creating compelling presentations, allowing embedding prototypes and real-time editing.

• Figma Design: The core product for high-fidelity visualization, offering vector editing capabilities and typography features.

• Figma Draw: A dedicated space for detailed vector editing within Figma Design, akin to a "younger sibling to Adobe Illustrator".

• Dev Mode: A dedicated space for developers to inspect designs, access key details, and translate designs into code, streamlining the design-to-engineering handoff.

• Figma Sites: Allows users to publish designs directly as working websites with a custom URL, including features for responsiveness and augmented code layers.

• Figma Buzz: A tool for creating on-brand marketing collateral like social media assets and digital ads.

• Figma Make: An AI-powered product that enables users to go directly from a prompt to a working prototype, fundamentally transforming the product development process.

AI Integration: AI is central to Figma's future vision. Products like Figma Make (turns design prompts into code) and First Draft (AI assistant for layout ideation) are designed to speed up prototyping and content creation. CEO Dylan Field has emphasized doubling down on AI, even if it temporarily impacts operational efficiency, as AI will shape future design and development workflows.

2. Figma's Business Model and Robust Financials

Figma operates on a successful freemium business model, offering a free 'Starter' plan alongside various paid subscription tiers for individuals and teams. The goal is to get users familiar with the free product, fostering widespread adoption, and then convert them into paying customers as their needs grow, often within organizations.

The pricing plans include:

• Starter: Free, suitable for individuals, limited to three Figma and FigJam files.

• Professional: ~$15/user/month (annual billing), for small to medium teams, offering unlimited files and version history.

• Organization: ~$45/user/month (billed annually), for large enterprises needing advanced collaboration and management features like organization-wide libraries and centralized file management.

• Enterprise: ~$75/user/month (billed annually), the highest tier for advanced security and customization.

Product-Led Growth (PLG): Figma's growth is heavily driven by its product. Individual designers often start using the free or professional plans, and as they collaborate, other team members and departments adopt it, organically expanding its use across organizations. 70% of enterprise deals began with a user on a Professional plan.

Beyond subscriptions, Figma also generates revenue from its whiteboarding tool FigJam and fees from third-party plugin developers.

Key Financial Highlights:

• Last Twelve Months (LTM) Revenue: $821 million, as of Q1 2025.

• LTM Revenue Growth: 49%. The company reported 46% year-over-year revenue growth in Q1 2025, reaching $228.2 million, following $749 million in revenue for fiscal year 2024 (a 48% increase from 2023).

• LTM GAAP Gross Margin: 91%.

• Net Dollar Retention: A strong 132%, indicating existing customers are increasing their spending.

• Profitability: Figma returned to profitability by Q4 2024 and maintained profits in Q1 2025, after incurring a significant net loss in 2023 due to substantial employee stock compensation.

Figma boasts an impressive customer base, with 95% of Fortune 500 companies and 78% of Forbes Global 2000 companies using its product as of March 2025. This deep penetration into large enterprises, coupled with the fact that only 24% of Forbes Global 2000 companies spent more than $100,000 on Figma as of March 2025, suggests a substantial "material expansion opportunity" as more companies expand product usage to more expensive seats.

A notable event in Figma's recent history was the failed $20 billion acquisition by Adobe in late 2023 due to regulatory roadblocks. Figma received a $1 billion termination fee from Adobe, which contributed to its net income in 2023. Despite the setback, Figma's valuation has rebounded, with a tender offer in May 2024 valuing the company at $12.5 billion, and a current estimated valuation nearing $17.84 billion.

Unique Aspects: Crypto Integration Figma is taking a bold step by integrating cryptocurrency into its corporate strategy. The company holds $70 million in a Bitcoin ETF (Bitwise's BITB ETF) and has plans to invest an additional $30 million via USDC stablecoin earmarked for Bitcoin. This move signals to investors that crypto is seen as a legitimate tool for diversification and long-term value preservation, aligning with a broader trend of companies holding Bitcoin in their treasuries.

Furthermore, Figma's S-1 filing includes references to "tokenized equities" and "blockchain common stock", indicating a potential exploration of blockchain-based assets for future stock distributions or employee compensation plans. While Figma clarifies it has no "specific plans" to issue these tokenized shares at this time, this forward-looking strategy positions Figma as a forward-thinking tech company, potentially attracting blockchain-savvy investors and talent. This hints at a future where traditional equity and crypto assets coexist, and could attract a new generation of investors valuing flexibility and decentralization.

3. The IPO Details: What to Expect

Figma plans to list its shares on the New York Stock Exchange (NYSE) under the ticker symbol "FIG". The company is targeting an IPO price of $25 to $28 per share and plans to sell 37 million Class A shares. The IPO underwriters include major financial institutions such as Morgan Stanley, Goldman Sachs, JPMorgan, and Bank of America Securities.

The IPO is expected around July 31st. Co-founder and CEO Dylan Field will retain substantial control, holding 73.6% of the company's voting rights after the public offering. Field has also set a long-term vision, emphasizing "long-term compounding (measured in decades)" over "quarterly share price appreciation" or "quick riches". He acknowledged that the company might take "big swings" and make decisions that "may not seem immediately rational" for long-term growth, and warned investors not to expect "share price growth" due to market fluctuations.

4. Key Considerations for Investors

A. The Lock-up Period

The sources confirm that a lock-up period is in place for Figma's IPO, a common practice preventing employees and early investors from selling shares immediately after going public [Previous conversation]. This aims to prevent a flood of shares that could depress the stock price [Previous conversation]. While the exact duration of Figma's lock-up period is not specified in the provided sources (typically 90 to 180 days), its expiration can lead to "a lot of selling pressure as employees will be able to sell their shares to take profits," potentially causing a dip in the stock price [Previous conversation]. This could offer a more attractive entry point for new investors [Previous conversation].

B. Market Opportunity (Total Addressable Market - TAM)

Figma estimates its total addressable market (TAM) to be $33 billion today, based on the global workforce engaged in software design. This vast market size, coupled with Figma's strong penetration in large enterprises and its expanding product suite, suggests significant room for continued growth and revenue expansion.

C. Competition

Figma operates in a competitive landscape, facing off against established players and emerging threats:

• Adobe XD: While Figma has "outlasted Adobe in this arena," and Adobe has stopped "investing in ongoing development or shipping new features within the product" for XD, Adobe remains a competitor through its broader ecosystem and other creative tools like Photoshop and Illustrator. Many organizations still use both Figma and Adobe products.

• Sketch: A popular desktop-based UI/UX design tool exclusively for Mac users, known for its extensive plugin library.

• InVision Studio: Favored for interactive prototyping and animation, offering cloud-based collaboration.

• Axure RP: Ideal for UX designers needing advanced prototyping and wireframing with conditional logic and dynamic content.

• Canva: A cloud-based design platform popular among non-designers and marketing teams due to its ease of use and templates.

• Emerging AI-driven Competitors: Figma acknowledges the risk from "competitive developments in AI" and emerging AI-driven design competitors like Lovable, even as it actively invests in its own AI capabilities.

D. Strengths and Weaknesses/Criticisms

Strengths of Figma:

• Collaboration: Its real-time, cloud-based collaboration is a major advantage, streamlining workflows for diverse teams.

• Ease of Use: Known for an intuitive interface and low learning curve, making it accessible to designers of all skill levels and even non-designers.

• Cloud-Based Access: Allows users to access designs from any device and platform without installations.

• Robust Ecosystem: Supported by a growing library of plugins and integrations.

• Strong Financials: Demonstrates high revenue growth, impressive gross margins, and strong net dollar retention.

• Market Dominance: Widely used across Fortune 500 and Forbes Global 2000 companies, with many considering it the industry standard for UI/UX.

Weaknesses and Criticisms (often opinion-based):

• Offline Access: As a cloud-based tool, it primarily requires an internet connection.

• Cost: While offering a free plan, its paid tiers can be perceived as relatively expensive for some users compared to alternatives.

• Interaction Design Limitations: Some designers argue that Figma can be "unbelievably unusable in some ways for actual interaction design for complex interfaces" and that it struggles with "interaction, behaviour, and motion" compared to tools like Axure. This can lead to prototypes that are less realistic or complex.

• Over-reliance and Process Issues: A common criticism is that Figma, due to its ease of use and all-in-one nature, can encourage designers to jump straight to high-fidelity UI work, potentially skipping crucial low-fidelity ideation, research, and testing phases. This might lead to "jumbled process" or "bad practice" if not managed well by the organization. Many argue this is an "org problem and a leadership problem – rather than a Figma problem".

E. Current IPO Market Context

The Q1 2025 global IPO market has been characterized by "profound uncertainty," "heightened volatility," and "wavering investor confidence". Many companies initially planning Q1 listings delayed their IPOs. The aftermarket performance of recent IPOs has been "mixed," with several deals trading below their IPO price. While the US IPO market showed resilience in Q1 2025, overall market sentiment remains cautious, with investors being more selective and demanding robust financial performance. This "cautious start amid heightened market uncertainty" suggests that a first-day pop for Figma is not guaranteed to be sustained.

5. Guidance for Canadian Investors

As a investor eyeing Figma's IPO, here's what you need to know:

• Buying the Stock: You will most likely be buying Figma's stock on the open market once it begins trading on the NYSE, rather than at the initial offering price, as IPO allocations are typically prioritized for institutional investors. Be prepared for potential "wild upward momentum" above the initial offering price upon listing.

• Brokerage Access: You will need a brokerage account that provides access to U.S. stock exchanges, specifically the NYSE. Most major Canadian online brokerages offer this.

• Tax Implications: (This information is outside the provided sources, and should be independently verified with a professional.) Investing in U.S.-listed stocks can have different tax implications for Canadian investors compared to Canadian stocks. For instance, there may be U.S. withholding tax on dividends paid by U.S. companies. Any capital gains realized from selling the stock would also be subject to taxation in Canada. Consulting a financial advisor or tax professional familiar with cross-border investments is highly recommended.

• Patience is Key: Given the current market volatility and CEO Dylan Field's emphasis on "long-term compounding (measured in decades)" over "quarterly share price appreciation", a patient approach might be beneficial. Waiting for initial market fluctuations to settle, and potentially for the lock-up period to expire, could offer a more strategic entry point for a long-term investment.

Conclusion

Figma's IPO represents a compelling opportunity to invest in a company that has fundamentally transformed the design industry with its collaborative, cloud-based platform and aggressive product expansion into AI-powered tools. Its strong financials, widespread adoption, and vast addressable market are significant draws.

However, investors should be mindful of the competitive landscape, the inherent risks associated with AI development, and the current uncertain IPO market conditions. By taking a thoughtful, informed, and potentially patient approach, you can position yourself to participate in Figma's journey as it seeks to redefine how digital products are created and built globally.

References

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- "Figma Business Model Breakdown: PLG, Pricing, and GTM Strategy - Startup Spells": https://startupspells.com/

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- "Figma's Tokenized Equity Statement Signals A Bold Step Toward Integrating Blockchain With Traditional Finance - Tekedia": https://tekedia.com/

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- Transcript of the video "Should You Buy The Figma IPO? 🚀 IPO Analysis & Insights for July 2025! #fig #robinhood #ipo " uploaded on the YouTube channel "No Pants Profits": https://www.youtube.com/@NoPantsProfits

- "Top 10 Insights From Figma's IPO Docs … That You May Have Missed": URL not explicitly provided in the excerpts.

- "Why IPO is a really bad time to invest in a company? - Reddit": https://www.longtermfolks.com/p/why-ipo-is-a-really-bad-time-to-invest