Anyway, I agree this turned out phenomenally well for Figma and if I were an employee I’d be really happy about how this all turned out both for Figma and the industry (modulo the delay in cashing out).
Now Figma has an extra billion for development and Adobe has to start back up the thing they couldn't catch Figma with in the first place.
It was pretty much a win/win for Figma regardless of outcome. Though this outcome is a win for Figma and it's users.
Features and free advertising. Many people knew of Figma, but now everyone knows of Figma. It's the tool that was good enough to scare Adobe into paying 20B and stopped by regulators.
As for valuation, same as valuations a purchase or how they get valued whenever there’s a round of investment (basically you do a sophisticated argument over value using comparables as a way to try to establish a baseline). The equity purchased would equal how much cash gets infused vs the valuation established by the deal.
Plus, if the best that Figma can do with a billion dollars is just invest it in Treasuries (and I'm not saying that's the case), then they should just give it to their shareholders and see if they can get a better return. I only point this out because many people are often confused by the effects of higher interest rates, e.g. "Why did this company lay off all these people when they're still profitable?" Your example highlights the reason why perfectly - if you're a company with a billion dollars of investment and the best profit you can muster is $50 million a year, you're a great business if Treasuries are only paying 1%, but when they're paying 5% you should just basically close up shop as people can get the same return just sticking their money in Treasuries.
If only you could repeatedly negotiate and then recover breakup fees as a business..
The issue is that they conflated ARR, which obviously does have a cost, with the largely "free money" from their breakup fee.
Probably should just compare $1bn cash to their company valuation and what another round of investment might look like. How much equity did they get to “keep”.
That would be very awkward (and even dangerous) to have a competitor as an investor.
Adobe is the biggest player in the space, so if denied, might put a damper on future acquisition price.