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Figma Inc is a technology company which is known for developing web applications aimed at designers. It was founded in 2012 by Dyland Field and Evan Wallace, who were at the time university students at Brown University. The pitch, according to its founders, was to allow ‘anyone to be creative by creating free, simple, creative tools in a browser’. The organisation is based in San Fracisco, California.
The type of tools designed by Figma are vaguely similar to Canva (perhaps a more well-known, household name amongst the general public), but with a greater emphasis on professionals working in UI/UX design (rather than beginners, or those seeking to create more simple graphics). Figma also allows for greater collaboration, with live multi-user editing and code handoff tools.
In more recent years, Figma have jumped aboard the artificial intelligence (AI) bandwagon by rolling out AI-assisted tools, such as ‘Figma Slides’ (released in beta form in mid 2024), which allowed for collaborative presentation projects with assistance from AI.
Monthly active users stand at approximately 13 million currently, but includes a range of large institutions such as Microsoft and Google. The customer base is also particularly strong internationally, with approximately 85% of its users being from outside the United States.
Figma have generally experienced strong growth in their early years. Its overall valuation has risen massively from around $2 billion in 2020 to approximately $16 billion today. It has achieved this growth through a number of capital injections from various investors over the last few years, including $40 million Series C from Sequoia Capital in 2019, $50 million Series D from Andreessen Horowitz in 2020, and $200 million Series E from Durable Capital in 2021. Silicon Valley-based venture capitalists have spoken highly of the organisation for a number of years. These large investors are following the upcoming listing with interest, since it has been seen by many as a form of test-run of a venture-capital backed technology start-up hitting the IPO market after a few years of difficult forecasts.
The company’s 2024 revenue reached almost $750 million, showcasing an impressive year-on-year growth up 48%.
Recent additions to bolster performance include industry veterans like Luis von Ahn (co-founder of Duolingo) and Mike Krieger (co-founder of Instagram).
An IPO (initial public offering) is a crucial process for aspiring corporate lawyers to understand – while the concept is not generally taught within undergraduate law degrees/law conversion courses like the PGDL, and even the SQE’s Business Law and Practice module fails to cover the topic in any depth, it is often covered as part of any supplemental firm-specific law school courses after the SQE (such as on BPP’s ‘Essentials for Practice’) as part of studies around Equity Finance.
In short, an IPO is the first time that a company sells its shares, usually by listing on a stock exchange, to the public. There are a number of key parties involved. Aside from the company itself, underwriters will be selected – these are usually large financial institutions who run the process, including matters of due diligence, filing, and marketing. The underwriters also generally agree to purchase the shares themselves (often with a view of passing some of those shares onto the public once the listing occurs).
The main reason for a company to complete an initial public offering is to raise capital – by selling shares, the organisation can raise a large amount of money, which is then used for further growth or expansion. This is a form of equity financing – unlike with debt, there is not the same pressure to meet repayment deadlines or worry about ‘gearing’ requirements (though there will be similar pressure to grow the company’s value and issue dividends). The process also increases the public profile of the company (improving its reputation worldwide if listed on a reputable exchange).
There are, of course, drawbacks to the process, too. The process of preparing for an IPO is extremely expensive and time-consuming. In Figma’s case, financial institutions advising include Morgan Stanley and Goldman Sachs, while the legal advisors include Fenwick & West (advising Figma) and Latham & Watkins (advising the underwriters). Furthermore, an IPO means the company will remain on the New York Stock Exchange going forwards – listing on any major stock exchange means heavy ongoing administrative work relating to legal processes like disclosure and reporting requirements.
The New York Stock Exchange is a world-renowned platform for initial public offerings. As a result, there is a level of prestige associated with this exchange, which simultaneously houses long-term, well-established organisations (known as ‘blue chip’ companies). A listing in New York also gives access to the US equity capital markets, which are the deepest in the world – with especially high funds available for investment into technology companies like Figma. Furthermore, a number of most of the major investors already mentioned in Figma are based in the US (for example, Sequoia Capital).
The London Stock Exchange, or LSE, has, in contrast, been somewhat troubled in recent years in relation to attracting listings. The equity capital markets, while relatively well-developed, are generally less deep, the valuations tend to be more conservative and value-orientated (whereas US tech stocks can often ride a wave of optimism and ‘hype’ to some extent), regulation in the UK is generally quite heavy, and private equity is becoming increasingly dominant (an alternative to listing on a stock market).
IPOs are crucial moneymaking processes for the equity capital market practices at various major City law firms. Furthermore, exciting growth industries like US-based tech companies are always attractive clients for solicitors to advise. In the UK, the leading firms carrying out this kind of work (and therefore the ones who would be most interested in hearing about your analysis of this story in an application) include Magic Circle and elite US outfits. Based on the most recent Chambers rankings, the leading firms in Band 1 include A&O Shearman, Clifford Chance, Linklaters, and White & Case.
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