Figma went public on July 31, 2025, pricing shares at $33 and closing the first day at $115.50. This 250% gain provides insight into the current state of technology IPOs after three years of limited activity.

The IPO Drought (2022-2024)

The IPO market contracted sharply from 2022 through 2024. U.S. venture-backed IPOs dropped from 155 deals raising $60.4 billion in 2021 to just 61 deals raising $13.3 billion over the next three years combined.

Rising interest rates made growth investments less attractive. Inflation shifted investors toward profitable companies with immediate cash flows. Regulatory scrutiny increased for large acquisitions, reducing exit options for private companies.

Technology companies were hit hardest. Only 13 venture-backed tech companies went public from 2022-2024, compared to 77 in 2021. Major companies like SpaceX, Stripe, and Databricks stayed private despite large valuations.

Signs of Recovery in 2025

Several companies showed improved market conditions in early 2025. Circle, a crypto company, went public in June at $31 per share and reached $195 by July. CoreWeave, an AI infrastructure company, went public in March at $40 and hit $140 by summer.

IPO volume increased in the first half of 2025. Ninety-five companies went public, raising $15.6 billion through June. This was 30% more than 2024 and nearly double the combined totals from 2022 and 2023.

However, success has been limited to companies with strong finances and clear market positions. The market is more selective than in 2021.

Figma’s Business and IPO Details

Figma reported $749 million in revenue for 2024, up 48% from 2023. First quarter 2025 revenue was $228.2 million, up 46% year-over-year. The company made $44.9 million in profit during Q1 2025 and achieved 91% gross margins.

The company has 13 million monthly users and over 1,000 clients paying at least $100,000 per year. Major customers include Netflix, Google, Microsoft, and Uber. Two-thirds of users are not traditional designers.

The IPO included 36.9 million shares. The company sold 12.5 million new shares while existing shareholders sold 24.4 million shares. Figma raised $1.2 billion, though most proceeds went to selling shareholders.

Major investors included Index Ventures (17% stake), Greylock Partners (16%), Kleiner Perkins (14%), and Sequoia Capital (8.7%). CEO Dylan Field kept 74% voting control through special shares.

Investor Demand

The IPO was oversubscribed by 40 times, meaning demand exceeded available shares by that ratio. Figma used an auction-style process where investors specified how many shares they wanted and at what price.

The company raised its price range multiple times during marketing. It started at $25-$28 per share, moved to $30-$32, and finally priced at $33. These increases reflected strong investor interest.

Morgan Stanley, Goldman Sachs, Allen & Company, and J.P. Morgan were the lead investment banks.

Was the IPO Priced Too Low?

Figma’s 250% first-day gain suggests the company could have priced shares much higher. This large gap between the $33 offer price and $115.50 closing price may indicate missed opportunity.

If Figma had priced at $50 per share, it would have raised about $630 million more. At $60 per share, it could have raised $1 billion more while still seeing strong first-day gains.

Several factors may explain the conservative pricing. Market uncertainty earlier in 2025 made pricing difficult. The three-year IPO drought meant few recent deals for comparison. Investment banks often prefer safe pricing over maximum proceeds to ensure successful debuts.

The auction process may not have captured full demand. Institutional investors often start with conservative bids and adjust higher during final discussions. The 40x oversubscription became clear only after pricing was set.

Impact on Different Parties

The pricing outcome affected various groups differently. Existing shareholders who sold received $33 per share instead of potentially higher amounts. This represents hundreds of millions in opportunity cost.

IPO investors who bought at $33 saw large paper gains, though these depend on future stock performance. The company raised about $400 million from new shares, providing funds for growth.

Higher pricing would have given Figma more capital but carried execution risks. A failed IPO could have hurt other companies planning to go public.

Market Changes Since 2021

The 2025 IPO market differs from 2021 in several ways. Companies going public are larger and more mature, with proven revenue and clearer profits. Median revenue for 2025 IPO companies exceeds $500 million, compared to under $200 million in 2021.

Valuation multiples have dropped. Software companies that traded at 20-30x revenue in 2021 now typically price at 10-15x revenue. This reflects more conservative investor expectations.

More companies are using auction-style pricing instead of traditional methods. This allows market forces to set prices but can result in higher costs for investors.

Risk Factors

Several factors could limit continued IPO activity. Interest rate changes remain uncertain and could pressure growth stock valuations. Policy changes, like tariff proposals in April, have already caused some companies to delay IPOs.

Most successful 2025 IPOs have been in AI, fintech, or crypto sectors. This concentration suggests the recovery may not apply to all technology categories.

Upcoming lockup period expirations will test whether initial valuations were appropriate. CoreWeave’s lockup expires in September, while Circle’s and Chime’s expire in December.

What This Means Going Forward

Figma’s IPO provides one data point about current market conditions. Strong institutional demand exists for high-quality companies, but success remains selective.

The pipeline includes companies like Discord, Klarna, and StubHub. However, market conditions can change quickly based on economic data or policy developments.

For venture capital firms, successful exits are essential for returns and future fundraising. The concentration of gains in a few top-performing companies reflects market dynamics that favor exceptional businesses.

Whether current conditions continue will depend on economic stability, policy environments, and the ability of newly public companies to meet investor expectations over time.