Figma, the hugely popular design tools used by most UI/UX designers these days, has secured a valuation of $12.5Bn following a substantial investment by a consortium of high-profile investors, reports Bloomberg. The group, which includes Coatue Management, Alkeon Capital Management, and General Catalyst Partners, has backed the San Francisco-based design startup as it continues to expand its footprint in the market.
While the precise details of the funding round haven’t been officially disclosed, reports indicate a significant surge in Figma’s annual recurring revenue (ARR). The company is estimated to have surpassed $700 million in ARR, with projections reaching $1 billion by the end of the year. This impressive growth represents a substantial leap from the $400 million ARR reported in late 2022. The recent transaction was a secondary share sale, also known as a tender offer, involving current and former employees as well as other equity holders. However, it is known that the investment group includes a diverse array of entities such as SurgoCap Partners, Atlassian Corp., Fidelity Management & Research Co., Franklin Templeton’s Franklin Venture Partners, and Iconiq, among others.
Founded 12 years ago by Dylan Field, Figma has carved a niche for itself as a leader in cloud-based design software. The company’s core strength lies in its collaborative tools, which empower multiple stakeholders to work on user interfaces (UIs) for websites and applications simultaneously. This streamlines the design process, fostering efficient communication and feedback loops between designers, developers, and other project members. Additionally, Figma offers a range of no-code tools that simplify the creation of complex UI components. These tools empower even those without extensive coding expertise to contribute meaningfully to the design process.
Figma, like many other tech firms, has jumped on the AI wagon and has been actively integrating AI features into its platform. This includes the introduction of Figma Slides, an AI-powered tool designed to streamline the creation of visually engaging presentations. Earlier this year, Figma launched “Make Design,” an ambitious tool that leveraged generative AI to create entire UIs based on user input provided through natural language commands. With this, users could simply describe the desired application (for example, “weather app”) and have Make Design generate a fully functional UI.
However, the tool faced criticism for its inability to produce truly original work. Software executive Andy Allen publicly demonstrated how Make Design consistently replicated Apple’s stock weather app with slight variations, raising concerns about the tool’s creative capabilities. In response to this feedback, Figma opted to “temporarily disable” Make Design, and it remains unavailable as of now.
In June, the company also launched a suite of new AI features and introduced Figma Slides, a visual storytelling tool. These features are designed to enhance the user experience and streamline the design process. Despite the setback with Make Design, Figma’s financial performance and its established position in the design software market have instilled confidence in major investors. Today, the company boasts a prominent list of backers, including Coatue Management, General Catalyst Partners, Andreessen Horowitz, and Apple executive Eddy Cue.
