Figma: Beneficiary in the Age of AI

Figma is a company we have long admired. It belongs to that rare class of software products, not dissimilar to Shopify or Xero in their early years, that garners a fierce, cult-like following from its user base. The company is led by its visionary co-founder, Dylan Field, who demonstrated an extraordinary aptitude for mathematics as a child and later studied computer science at Brown University. In 2012, Field won the prestigious Thiel Fellowship and dropped out of university to pursue business interests, mirroring the paths of iconic tech founders like Mark Zuckerberg and Bill Gates.

Together with his university friend Evan Wallace, Field realised that browser-based graphics technology (WebGL) could be leveraged to bring high-fidelity, complex design tools directly into the web browser. They spent four years building this core engine before launching Figma publicly in 2016. The tool completely revolutionised product design by introducing seamless, simultaneous multi-user collaboration. Before Figma, designers worked on isolated desktop files and manually emailed mockups to product managers and developers. Figma upended this paradigm by introducing a real-time collaborative canvas that stayed pixel-perfect, completely changing how digital products are built.

This technological moat quickly caught the attention of design juggernaut Adobe, whose market capitalisation sat at an impressive $340B in late 2021. In a defensive countermove, Adobe had launched its own competitive software, Adobe XD, back in 2016. However, Adobe’s product was plagued by architecture challenges and struggled with real-time cloud synchronisation. Sensing Figma’s momentum, Adobe abandoned its internal efforts, ceased supporting Adobe XD, and launched a $20B takeover offer to acquire Figma.

That blockbuster acquisition never eventuated. UK and European regulators blocked the merger over antitrust concerns, fearing it would choke market competition. Forced back onto an independent path, Figma launched its highly anticipated IPO on July 31, 2025. Initial investor enthusiasm was frenetic, sending Figma’s market capitalisation soaring from an implied valuation of $19B up to a peak of $56B. Today, however, that same market capitalisation has compressed to just $9B. This aggressive markdown was not caused by internal failures, but rather by a broader “software is dead” narrative that has battered the entire SaaS sector indiscriminately as investors panic over generative AI.

This sector-wide selloff provides us with a rare opportunity to buy an industry leading business at a highly attractive valuation. Our strong conviction is that Figma is a structural winner in an AI-driven world. At its core, product design is an inherently subjective, intentional process of structuring concepts to solve concrete problems, which is an area where raw AI fundamentally struggles. Design requires multiple stakeholders to align their internal representations of a product and resolve competing constraints. Figma provides the visual space where this alignment happens. As generative AI tools proliferate, the market will require a definitive, cross-disciplinary “system of record” to capture human intent and manage repeatable workflows. Figma is that system.

The financial data proves this thesis is already playing out. Since its 2025 IPO, Figma’s revenue growth has accelerated sequentially from 38% in Q3 2025, to 40% in Q4 2025, and hitting 46% in Q1 2026. This acceleration is being fuelled by rapid AI adoption and an enterprise Net Dollar Retention (NDR) of 139%, up from 136% the previous quarter. To contextualise this metric, think of a SaaS business as a bucket of water: if you start the year with a cohort of customers paying you $100, and by the end of the year those exact same customers are paying you $120 due to seat expansion and upgrades, your NDR is 120%. Figma is expanding its revenue per customer while simultaneously growing its baseline. Total paying customer accounts reached 690,000 last quarter, representing a staggering 54% increase year-over-year.

Figma is an exceptional long-duration compounder. Rather than standing still, management is aggressively expanding its platform utility to capture a larger share of enterprise budgets. This strategy was on display at Figma’s annual Config conference in San Francisco this week, where they unveiled five platform upgrades that transform code, animation, and AI into native canvas materials:

• Code Layers: Historically, developers had to manually translate static design mockups into production code from scratch. Code Layers allows live, executable frontend code (like React, HTML, and CSS) to run directly on the Figma canvas. This bridges the gap between design and engineering, creating a single shared building environment and insulating Figma against standalone text-to-code AI tools.

• Figma Motion: This feature embeds a native, timeline-based animation engine directly into the canvas. By eliminating the inefficient handoff tax of exporting static assets into specialized video tools like Adobe After Effects, animation data now flows directly to production code through Dev Mode and Figma’s native MCP server. This allows human engineers and AI coding agents alike to instantly extract production-ready timing parameters, mounting direct competitive pressure on Adobe’s legacy video monopoly

• Figma Weave: A structured AI framework built directly into the canvas. Instead of using generic prompt bars that output unpredictable layouts, Weave allows enterprises to build reusable AI workflows for imagery, video, and audio assets that strictly enforce brand guidelines, dimensions, and tone, minimising manual cleanup.

• Custom Shaders: Powered by high-performance WebGPU rendering, users can leverage AI prompts to generate complex, parameterized visual textures, like 3D mesh gradients and frosted glass, directly on the canvas. These can be stacked and dynamically animated inside the Figma Motion timeline.

• Generative Plugins: Figma has stripped away the coding barrier required to build platform extensions. Through simple natural language prompts, users can command the Figma Agent to instantly write the logic and UI for custom internal operational tools, such as automated asset reordering or padding fixes.

We remain excited about Figma’s future. International Data Corporation (IDC) pegs the total addressable market for design software at over $30B. With annualised revenue sitting just over $1B, Figma has captured only a fraction of its ultimate potential. While the macro market remains blind to software’s true AI beneficiaries, Figma is executing, boasting 46% accelerating growth, zero debt, and a $1B cash cushion for strategic acquisitions. The market’s short-sightedness is our structural advantage, and we are firmly committed to owning this compounding giant for the long term.