Figma Files for IPO Amid an AI-Fueled Design Shakeup

American software design company Figma confidentially filed for an initial public offering (IPO) in the United States on Tuesday. The development comes more than a year after Adobe’s $20 billion acquisition of Figma was cancelled due to regulatory concerns. Adobe paid a termination fee of $1 billion to Figma. 

Figma is among the most widely used tools in the user experience (UX) design industry. As of last June, the company’s annual recurring revenue (ARR) reached $700 million, and it has raised a total of $748.6 million through multiple funding rounds. 

Over the years, Figma has been the primary choice of software for user interface design, thanks to its freemium model, relatively easy learning environment, collaborative features (FigJam), and a suite of regularly updated prototyping tools. 

One of the bigger concerns for Figma, more than the competition, is the recent volatility in the US markets. President Donald Trump’s stance on imposing import tariffs has shaken the market, pushing a few companies to put their plans for an IPO on hold. Financial Times reported that fintech firm Klarna and medtech company Medline have postponed their IPO plans. 

After a company files its S-1 registration statement with the Securities and Exchange Commission (SEC), the company can go public after an estimated four months, depending on the SEC review process and market conditions. 

‘It’d Be Hard to Get Away from Figma’

Besides, the rise of vibe coding tools such as Windsurf, Lovable, Cursor, and Replit poses a looming threat to Figma. These tools not only assist users in rapidly prototyping interfaces but also generate the corresponding code, all using natural language prompts. 

Is Figma troubled? Maybe a little. The platform recently notified Lovable (an AI-enabled coding platform), forbidding it from using the term ‘Dev Mode’ in its product. Figma claims to hold the ‘DEV MODE’ trademark. 

To understand the competition, AIM reached out to Akshay Verma, founding partner at Prophecy, and previously an early member at Obvious, one of India’s leading design consultancy firms, now part of PhonePe. 

Verma acknowledged that AI enables everyone, even those with minimal coding experience, to bring their ideas to life – but there is a caveat. 

“Figma still has its place for designing interfaces and for prototyping interactions. Prototyping is meaningless if you’re not going to test with users. And the tool you choose depends on what you’re trying to learn,” he added. 

He said that if the goal is to learn whether what one is building will be useful or desirable, AI-enabled coding tools can be a fine choice. However, to test usability, eliminate biases in the user interface, or anything beyond early-stage usefulness, Verma said, “It’d be hard to get away without a tool that affords more control, like Figma.”

However, he also suggested that not all applications may need the intricate control that Figma offers to craft user interfaces. “In fact, most people would be happier interacting with an interface built using well-built, but cookie-cutter components, than using a poorly implemented custom UI,” he added. 

He concluded by saying that rapid prototyping with AI is a “great thing to do”, but Figma isn’t going away soon for production-related work. 

Opinions on this competition, among a diverse group of industry leaders, lie on a spectrum. AIM also reached out to Viba Mohan, a product designer based in California, who said, “I see myself using code to polish my concepts much more than Figma on most days.” 

“I also see this reflected in the industry, especially with smaller teams. It has made the development process so much faster,” added Mohan, while indicating that larger companies that are slower to adapt to this change might face consequences. 

Mohan also believes it’s premature to seek a replacement for Figma. Its extensive user base provides a competitive edge, facilitating the distribution of its recently developed AI features. Moreover, Figma’s vast plugin ecosystem has enabled users to seamlessly develop and integrate various AI-enabled functionalities. 

— Abraham John 🦄🦓 (@Abmankendrick) April 3, 2025

Recently, it was also announced that Modyfi, a browser-based AI-powered design platform, is joining Figma. Figma’s flagship event, Config, is scheduled for May, and the company is expected to make AI-related updates and announcements. 

Recently, a few users on X spotted a ‘Website Builder’ feature in the platform. If this is eventually launched, it would not only offer a strong competitive advantage against AI-enabled coding tools, but also low code/no code website development platforms like Webflow, and Framer, and possibly Canva. 

“Figma already has the tech foundation, and their prototyping engine is halfway to interactive sites,” Charles Ugo, a product designer, wrote on X. It’s “already in every designer’s toolkit. If they play their cards right…this could be the beginning of a serious market shift”, he added.