Figma Stock IPO Targets $16 Billion Valuation Amid Strong Investor Interest

Figma, the widely-used design software company, is making headlines with its upcoming initial public offering (IPO). With a tentative pricing range of $25 to $28 per share, the company has set its sights on a valuation of approximately $16 billion. Analysts predict that, should the IPO price exceed the high end of this range, Figma could emerge as one of the largest tech IPOs of the year.

The startup, led by founder and CEO Dylan Field, will offer around 12.5 million shares to the public. Uniquely, existing shareholders are being permitted to sell nearly twice as many shares as the company itself plans to offer. In total, they are expected to offload approximately 24.7 million shares. Depending on market interest, there could be an option for a further 5.5 million shares to be sold.

Field himself intends to sell 2.35 million of his shares. At the midpoint of the offering price range, this sale would amount to over $62 million. Despite this significant cash-out, Field will maintain control of the company post-IPO, retaining 74% of voting rights thanks to the supervoting power of the Class B shares. These shares provide 15 votes each and include those of Field's co-founder Evan Wallace.

The IPO also marks a liquidity event for Figma's major venture investors, such as Index Ventures, Greylock Partners, Kleiner Perkins, and Sequoia Capital. These entities plan to sell between 1.7 million and 3.3 million shares each. Their decision to sell may indicate confidence in the company's future, as they are retaining the majority of their holdings. This opportunity allows them to return funds to their investors amidst a venture market keen for liquidity.

It is noteworthy that the company does not expect to directly profit from the stockholder sales. However, if high demand pushes the share price above the predicted range, both Figma and its stockholders have the potential to capitalise significantly. While the timing for the IPO is subject to change, expectations are set for a near-term debut.

Despite the potential windfall from the IPO, Figma and its stakeholders remain cautious. The success of this offering could set a precedent for other tech IPOs in the current market climate. The company's capacity to meet demand hinges on the robust interest anticipated, with many seeing this as a litmus test for appetite in the tech IPO market.