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Who spends $20 billion in the middle of an economic crisis?

Big Tech This Week
Who spends $20 billion in the middle of an economic crisis?
By Fatu Ogwuche • Issue #52 • View online
Top of mind: Happy Sunday!
I’m amused at Adobe paying $20 billion to acquire Figma in this economic climate. Good thing they have a lot in the bank, considering they charge an arm for their products and make you pay for the privilege of leaving them.
Figma’s 30-year-old CEO is the winner here. I ain’t mad.
Let’s get to the madness this week.
3 big things:
  • Figma’s big payday
  • Kenya’s ARA backtracks
  • Capiter’s in trouble

Adobe buys Figma
Who spends $20 billion in the middle of an economic crisis?
Cover art by Samuel Jolayemi
Cover art by Samuel Jolayemi
The short: Adobe’s acquiring cloud-based design platform Figma for $20 billion. 
The deal: Adobe says the acquisition will be half cash and half stock, plus 6 million additional Restricted Stock Units (RSUs) to be awarded to Figma’s CEO and staff after four years.
The $20 billion exit is a significant victory for Figma’s 30-year-old CEO Dylan Field and their venture capital backers. A 2018 investor, Josh Coyne, is expected to make over 100 times his initial investment once the deal closes. Sheesh.
Investor backlash: Some Adobe investors aren’t happy. The stock was down by 17% on Thursday, making it its biggest plunge in a decade with a drop of more than $30 billion in market value. While investors think it’s a smart move, they believe Adobe overpaid Figma – which was valued at about $10 billion in a recent private funding round.
By the numbers: Figma’s annual recurring revenue is $400 million, meaning Adobe is paying more than 50 times its revenue. The deal is worth 11% of Adobe’s market value for a measly 2.8% increase in ARR.
Adobe’s plan: Adobe is enthusiastic. The company believes the deal will boost profitability in three years. It also forecasted that the design, whiteboarding, and collaboration portions of Figma’s total addressable market would be worth $16.5 billion by 2025, so it’s a win-win for them.
Final thoughts: I also think Adobe got a little too excited and overpaid for this one. This acquisition could either turn out to be a great deal like Instagram was for Meta or a $20 billion blunder. I vote for the former.
Kenya steps back
The short: Kenya’s Asset Recovery Agency (ARA) has dropped money laundering charges against three Nigerian companies after sufficiently proving the source of funds.
The allegations: In April 2022, Kenya’s Asset Recovery Agency asked the High Court to freeze Sh5.6 billion ($48.6 million) belonging to RemX Capital Limited, Avalon Offshore Logistics Limited, and OIT Africa Limited. They accused the companies of money laundering with the assistance of powerful politicians. Reports also claimed the companies were unresponsive in dealing with the ARA’s investigation.
Timing: The ARA might have been doing their jobs, but some insiders believe the target on the Nigerian companies in the middle of tense elections in Kenya was politically motivated. The ARA tried to label these companies as receiving the proceeds of a crime to make the companies forfeit the seized funds to the Kenyan state.
Final thoughts: The horse should have come before the cart on this one. If the ARA simply dropped the charges because the companies proved source of funds – shouldn’t that have preceded the investigation before putting a burden on the court? 
The ARA isn’t looking too good coming out of this one, but we’d see what the verdict is on the outstanding companies like Flutterwave and Korapay.
Capiter needs money
The short: Egyptian startup Capiter is broke and laying off staff a year after raising $33 million. 
Layoffs: Inside sources say Capiter fired at least 100 employees within two months. The company struggled to get new merchants for its platform while running out of money.
An Icarus tale: Last year, the company had 50,000 merchants, 1,000 sellers, and more than 6000 stock-keeping units on its platform. They were gunning for $1 billion in yearly revenue, and in typical startup culture, they hired too many people to help them reach that goal.
Sadly, the market conditions worsened in 2022, crippling multiple businesses, including Capiter.
Exit left: In a plot twist saved for the likes of Adam Neumann. The company fired the CEO and COO following allegations of embezzlement. The company’s investors have been desperately searching for buyers to take over the failing business through an acquisition or merger. Unfortunately, it’s not looking good.
Final thoughts: Capiter had a lot of promise, but with allegedly fraudulent C-suite executives and a struggling economy, it will take a big buyout to get them out of this mess. Hopefully, it’s not the C-suite that benefits when investors swoop in to save the day.
That’s it for the week. I’d love to hear your thoughts about this week’s issue. Please respond to this email or find me on Twitter @fatuogwuche :) 
Ps – do us a solid by sharing the newsletter with your network of tech enthusiasts. Invite them to join the party :)
See you next Sunday!
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Fatu Ogwuche

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