Adobe takes off another major competitor in the creative market as it buys out software design firm Figma for a $20 Billion cash and stock deal.
With their combined expansive portfolios, Adobe states in their Press Release that they will enable a rare opportunity to power the future of work by bringing together brainstorming, sharing, creativity, and collaboration capabilities and delivering these innovations to hundreds of millions of users.
“The combination of Adobe and Figma is transformational and will accelerate our vision for collaborative creativity,” said Shantanu Narayen, chairman, and CEO, of Adobe.
Figma has made a name for itself in the creative apps market as a forward-thinking and collaborative design platform.
“There is a huge opportunity for us to accelerate the growth and innovation of the Figma platform with access to Adobe’s technology, expertise, and resources in the creative space,” says Dylan Field, Co-founder, and CEO, Figma.
Dylan also stressed that Figma would remain independent even with the definitive merger agreement.
The StartUp Design Unicorn
Figma is a web-based design tool with real-time collaboration. As described on its website, it offers “a powerful set of design features you already love combined with a more efficient workflow.”
With its original objective to enable “anyone [to] be creative by creating free, simple, creative tools in a browser.”, Founders Dylan Field and Evan Wallace began working on Figma in 2012 while still studying at Brown University.
On December 3, 2015, Figma began offering a free invite-only preview program, and on September 27, 2016, it was released to the public for the first time.
Users applaud it because of how it significantly improves the web design workflow. As a result of the work-from-home movement during the pandemic, more designers needed tools to help them collaborate while separated.
With Figma’s collaborative features, design reviews can be done on the fly so that iterations can be done in minutes instead of days. More so, design workflow has become inclusive and seamless as the single file can be accessible to all technical and creative stakeholders.
For some, the effortless transition from design to coding makes the software an easy choice compared to its competitors.
In terms of valuation, the company’s value had grown to more than $2 billion by April 2020 and more than $10 billion by June 2021.
Figma has built an efficient, high-growth business with gross margins of approximately 90% and positive operating cash flows.
By 2025, Figma will have an addressable market of $16.5 billion. With best-in-class net dollar retention of greater than 150 percent, the company is expected to add approximately $200 million in net new revenue this year, surpassing $400 million in total revenue exiting 2022.
Software Acquisition Through the Years
It’s not the first time that Adobe has bought out a company. Adobe has a long history of buying out promising startups.
In 2020, Adobe acquired Workfront, an online project management service, for $1.5 billion, and Frame.io, a video feedback platform. In the second quarter, Adobe said, Frame.io’s annual recurring revenue grew by more than 50%, and Workfront’s sales increased by more than 35%.
Adobe is an American multinational computer software company. John Warnock and Charles Geschke founded Adobe in 1982 in San Jose, California. Adobe Creek ran behind the founders’ houses in California, which gave the company its name.
During the 1980s, Adobe entered the consumer software market with digital fonts. The company’s first consumer product was Adobe Illustrator, a vector-based drawing program for Mac computers.
Summing It Up
According to CB Insights Research- Tech Valuations Q2’22 Report, “Median tech valuations fell across the majority of stages in Q2’22 vs. Q1’22. However, most remained higher than in 2021 — and dramatically elevated compared to 2020.”
While the landscape may look like a downhill terrain, Fortune.com states an optimistic view, “For all the layoffs and the chatter about hoarding cash, valuations for tech startups are still really high.”
This latest development in the startup industry only shows that investors are willing to pay for the right idea and software. For more information on the next step for your napkin idea, click here.