![]() "They have a fabulous product that appeals to millions of people, they have escape velocity as it relates to their financial performance and a profitable company, which is very rare, as you know, in software-as-a-service companies."Īdobe needs the growth and new user base from Figma to maintain its dominant position in design. "Figma is actually one of these rare companies that has achieved incredible escape velocity," said Narayen, Adobe's CEO since 2007. Before that, the biggest was Macromedia for $3.4 billion in 2005.Īdobe CEO Shantanu Narayen explained his company's rationale on CNBC, as his company's stock ticker on the screen flashed bright red. ![]() Its largest prior deal came in 2018, when Adobe acquired marketing software vendor Marketo for $4.75 billion. "I took him to dinner and couldn't buy him a drink," Rimer said.įor Adobe, Figma marks the company's biggest acquisition in its 40-year history by a wide margin. Rimer said Figma has gone through quite a journey since he first met founder and CEO Dylan Field, who had dropped out of college to start the company as part of the Thiel Fellowship program, in which the tech billionaire Peter Thiel offered promising entrepreneurs $100,000 grants. While those sorts of numbers were routinely recorded during the record IPO years of 20, they're foreign this year, as investors reckon with surging inflation, rising interest rates and geopolitical unrest. They include Durable Capital Partners and Morgan Stanley's Counterpoint. Investors in the 2021 round doubled their money. That means they'll each return over $1 billion. The three venture firms that led Figma's earliest rounds - Index Ventures, Greylock Partners and Kleiner Perkins - all own percentage stakes in the double-digits, people familiar with the matter said. In such an environment, Figma's ability to exit at double its price from 15 months ago is a coup for early investors. venture-backed software M&A was tracking to its worst year since 2017." Tomasz Tunguz of Redpoint Ventures wrote in a blog post on Thursday that prior to this deal, "U.S. Given the plunge in cloud stocks, late-stage companies have steered cleared of the IPO market - and private financings in a lot of cases - to avoid taking a haircut on their lofty valuations. For the top cloud companies in the BVP Nasdaq Emerging Cloud Index, forward multiples have fallen to just over 9 times revenue from about 25 in February 2021. That's why Adobe is paying roughly 50 times revenue following a stretch this year that saw investors dump stocks that were commanding sky-high multiples. "This was very much both a defensive move but also an eye towards this trend where design rules and design matters." "This was a significant threat to Adobe," Lo Toney, founding managing partner of Plexo Capital, which invests in start-ups and venture funds, told CNBC's "TechCheck" on Thursday. Annualized recurring revenue is poised to more than double for a second straight year, surpassing $400 million in 2022. It's cheaper (there's even a free tier), easier to use, collaborative and modern, and has been spreading like wildfire among designers at companies big and small. There was no other bidder out there driving up the price, according to a person familiar with the matter who asked not to be named because the details are confidential.įigma's cloud-based designed software has been a growing headache for Adobe over the last few years. In a year that's featured exactly zero high-profile tech IPOs and far more headlines about mass layoffs than big funding rounds, Adobe's $20 billion acquisition of Figma on Thursday is what some might call a narrative violation. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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