VENDORiQ: Design Software Market Heats Up

Why it’s Important

Figma’s successful IPO, with shares tripling in value on the first day, is largely a result of its solid financial performance and clear growth strategy, which bodes well for its global expansion. This could prompt other private technology firms, such as Canva, to accelerate their own IPO plans to take advantage of the current market sentiment. The offering is ‘a very positive sign’ for other start-ups that might go public.

The IPO solidifies Figma’s position as a significant competitor in the design software market against established players like Adobe and Canva. Figma’s growth is driven by its focus on collaboration across different roles, with only a third of its 13 million monthly active users being traditional designers. This broad user base, which includes managers and developers, indicates that design is becoming a more integrated function within business operations. Figma’s decision to offer local data hosting in Australia addresses data sovereignty concerns and security requirements, which will attract government and high-compliance enterprise clients in the region. The strategy gives it a competitive edge in a market where data governance is a growing priority. 

Who’s Impacted

• CIO: Evaluate the implications of Figma’s market position on your firm’s design and collaboration tools strategy. Review your current software portfolio to assess whether existing solutions meet the demands for cross-functional collaboration and data sovereignty.
• CFO: Analyse the potential for an increase in Software-as-a-Service (SaaS) valuations and prepare for potential shifts in technology investment landscapes. Factor this market trend into future budgeting and capital allocation for technology.
• Chief Information Security Officer (CISO): Review data residency and security policies in light of Figma’s new local hosting options. Determine if your organisation’s data sovereignty requirements are better met by this offering compared to other vendors.

What’s Next

• Re-evaluate your organisation’s investment in design and collaboration platforms, considering the total cost of ownership and the breadth of user adoption.
• Formally assess the security and governance implications of cloud-based design tools, especially in regulated industries where data sovereignty is a concern.
• Monitor other competitors for announcements regarding investments and acquisitions, or strategic moves in response to this market event.
• Engage with your legal and compliance teams to understand the regulatory landscape for data hosting and data sovereignty in your key operating regions.