Figma Offers Employees Shares And Buyouts After Collapsed Adobe Deal

With its $20 billion acquisition by Adobe scrapped amid heightened regulatory scrutiny, design software startup Figma is now scrambling to adjust how employees — hundreds of whom joined in the year-plus since the deal was announced — are compensated as the company reverts to a valuation half of the announced deal price.

Figma CEO Dylan Field told employees on Thursday that, as the company planned to return to a $10 billion valuation for compensation purposes moving forward, Figma planned to boost equity packages for employees who had seen their stock-based pay precipitously drop in value with the termination of the deal. In a companywide note posted to Figma’s Slack work collaboration software channel, reviewed by Forbes, Field also announced a one-time ‘Detach’ program by which any employee could voluntarily depart the company in exchange for three months’ pay.

Under Figma’s compensation update, employees who joined the company in the 16 months since the announced Adobe deal will receive additional shares of Figma, up to 70% of the initial intended value of their pay packages negotiated under the higher $20 billion price tag. Those employees — approximately 500 staff, per a previous company blog post — and any others who joined the company in the year before the sale will also now be eligible to receive refresh grants of additional shares in the fall, per four sources with knowledge of the matter and Field’s note to staff.

Those changes would kick in on February 1, one day after the deadline for employees, known internally as ‘Figmates,’ to voluntarily leave the company in exchange for twelve weeks of severance — an unusual offer available to all of Figma’s 1,300 employees.

To several employees who received the message and asked to remain anonymous, Figma’s changes appeared to be adjustments to a new normal: a long-term future as an independent startup again, with its own profit-and-loss and growth expectations. By increasing equity plans, Figma could help stave off staff from being poached, particularly newer hires, one said. To another, the departure program appeared a tactic to trim bloated headcount.

Contacted by Forbes for comment, Figma confirmed the existence of the changes. “It’s taken tremendous discipline and grit to get to where we are today, and our path forward is going to require the same focus and intensity,” said spokesperson Michael Amodeo in a statement. “Figma is still a startup, and while we realize this may not be what some on our team expected or signed up for, we’re fired up for the next chapter and hope Figmates choose to stay and be a part of it.”

Figma’s move comes as the company must readjust to a startup environment more austere than the one during which it raised $200 million at its original $10 billion valuation in June 2021. Over that period, many startup unicorns, including fintech standout Stripe, raised down-rounds or saw their prices in the secondary market slashed. In his messaging to staff reviewed by Forbes, Field admitted that he didn’t know exactly what shares of Figma, which launched as a design software tool in 2015 and has since expanded into more areas of collaboration like digital whiteboarding, were worth.

But while Figma’s cofounder told employees that the market would have to decide that price at a future date — until which it would use its previous $10 billion valuation — secondary markets have already responded. On the same day as the Fields’ employee note in Slack, one shareholder offered up a $4.5 million position at an implied valuation of about $11 billion, according to secondary tracker Caplight. Closing 2023 with annual recurring revenue of about $600 million, growing more than 40%, as reported by The Information, Figma would be worth about $8 billion to $9 billion if valued by the same multiples of revenue as its closest competitors Adobe and Canva, said Ken Smythe, founder of secondaries firm Next Round Capital.

In the face of that new reality, Figma’s equity compensation changes were intended to realign staff pay packages with performance, a person with knowledge of the company’s thinking said. The changes don’t just affect recent hires: equity compensation attached to promotions, raises or job transfers made during the Adobe limbo period for all employees will also be adjusted to reflect 100% of their originally intended values, the person said. The company’s original rules on refresh grants requiring 2.5 years of service time were also relaxed to six months, meaning employees hired earlier in 2021 may also receive additional shares this fall.

At Next Round Capital, Smythe said such measures were the best tactic Figma could hope to take to offset financial disappointment of staff whose shares have essentially halved in value overnight. “Figma is doing right by their employees by repricing everything to reality now,” he said.

More eyebrow raising: Figma’s offer to any staffer, regardless of service time or role, to depart the company with pay. Because Figma waived its one-year cliff for any new employee to receive restricted stock units temporarily last year, any employee who chooses to leave can hold onto Figma equity at departure, a source said. They can also re-apply for a job at Figma, per Field’s note, after six months.

In his communications, Field said the ‘Detach’ offer, named for another design term, was about ensuring that those employees who choose to stay — and receive these equity adjustments on February 1 — are re-committed to the daily grind of working at a startup, not a subsidiary of a big tech company like Adobe. Field claimed he hoped no one would accept.

How many ‘Figmates’ do choose to depart will represent a referendum on both Figma’s recent staffing priorities and employee faith in its business prospects. Figma received $1 billion in cash as a breakup fee from Adobe in December; the company currently lists 58 open roles on its jobs site. But without another exit in sight, every dollar Figma spends moving forward carries a bit more weight. Reducing headcount could help Figma reprioritize resources toward higher-growth and higher-priority areas such as artificial intelligence, one current investor told Forbes.

“Let’s trim whoever is no longer motivated, is tired or no longer makes strategic sense,” the investor, who asked to remain anonymous because they weren’t authorized to speak, interpreted Figma’s motivations. “Let’s have folks that want to build psychologically recommit, and set their options at a level where upside can truly be 3x to 5x in the next two to three years.”