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Adobe to pay record-setting $20B in Figma acquisition—a bonanza for VC backers

Adobe Systems will buy design tool developer Figma for $20 billion in what would represent the largest acquisition of a VC-backed company ever, according to PitchBook data.

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Adobe agreed Thursday to buy design tool developer Figma for $20 billion in what would represent the largest acquisition of a venture-backed company, according to PitchBook data.

The deal also would result in a bonanza for several of Silicon Valley’s top venture firms, which have helped Figma’s valuation rocket higher since it raised seed funding in 2013.

The previous record purchase of a VC-backed company was set in 2014, when Facebook acquired WhatsApp for $17.2 billion.

In total, San Francisco-based Figma previously had raised more than $330 million from investors, according to PitchBook data. In 2015, Greylock Partners led the company’s Series A and was joined by investors including Index Ventures in a deal that valued Figma at $48.4 million.

Greylock and Index both have retained about a 13% stake in the company, The Information reported, which would result in a payday of roughly $2.6 billion under terms of the acquisition.

Figma was valued at $115 million in a $25 million Series B round led by Kleiner Perkins in 2018. A year later, the company grabbed a $40 million Series C, led by Sequoia, at a valuation of $440 million. In 2020, Figma commanded a $2 billion valuation in its $50 million Series D led by Andreessen Horowitz.

The company was last valued at $10 billion in June 2021 for a $200 million Series E led by Durable Capital Partners.

Adobe has agreed to pay twice as much for Figma as the company was last worth, and the price also implies a 50x annual recurring revenue multiple. That valuation is many times higher than the trading multiple of other cloud companies, according to Bessemer Venture Partners’ Cloud Index, which currently stands at 8.3x the average revenue multiple.

Adobe’s rich offer may reflect the tech giant’s need to retain the market share it is rapidly losing to the younger company, whose software has attracted users with its AI capabilities, according to Brendan Burke, a software and AI analyst at PitchBook.

“We have seen other enterprise software incumbents pay high premiums to acquire disruptive challengers with thriving developer communities that posed fundamental risks to their business,” Burke said.

He pointed to Okta‘s acquisition last year of Auth0 for $6.5 billion, a more than 3x step-up over the company’s last private valuation of $1.9 billion. Additionally, Microsoft paid $7.5 billion for GitHub in 2018, a substantial premium over the code-sharing platform’s previous private market price tag of $2 billion.

The deal price is an outlier at a time when software startup valuations have cooled off.

Adobe’s stock fell nearly 17% after the news was announced.

Correction: This article has been updated to clarify the quote from Brendan Burke.

Featured image by Darko 1981/Shutterstock

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    Written by Marina Temkin
    Marina Temkin covered the venture capital ecosystem from 2021 to 2024, based in San Francisco. Previously with Venture Capital Journal, Marina wrote about the VC industry, and she was a reporter with Mergermarket in New York and San Francisco. She also has been a financial analyst and is a CFA charterholder. Marina received an economics degree from the University of California, Davis, and she attended the CUNY Graduate School of Journalism.
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