Figma’s prospectus for last week’s blockbuster IPO had a lot of features in common with other recent IPOs, including a founder’s letter, lots of graphics, and multiple classes of stock. However, one of those classes of stock was not like the others. Here’s an excerpt from the prospectus’s description of Figma’s “blockchain common stock”:

Following this offering, our Board of Directors will be authorized, subject to limitations prescribed by Delaware law, to issue blockchain common stock in one or more series, to establish from time to time the number of shares to be included in each series and to fix the form, designation, powers, preferences, and rights of the shares of each series and any of its qualifications, limitations, or restrictions, in each case without further vote or action by our stockholders. Our Board of Directors can also increase or decrease the number of shares of any series of blockchain common stock, but not below the number of shares of that series then outstanding, without any further vote or action by our stockholders.

The number of authorized shares of our blockchain common stock may be increased or decreased (but not below the number of shares thereof then outstanding) by a vote of the holders of stock entitled to vote thereon, without a separate vote of the holders of the blockchain common stock, irrespective of the provisions of Section 242(b)(2) of the DGCL, unless a separate vote of the holders of one or more series is required pursuant to the terms of any applicable certificate of designation. Our Board of Directors may use the undesignated blockchain common stock to issue common stock, or rights or options thereto, in the form of blockchain-based tokens.

Liz noted in Friday’s blog that SEC Chairman Paul Atkins said that the agency was open to working with companies that wanted to “tokenize” securities or engage in other types of innovation. But what’s in it for the companies themselves – why would a hot commodity like Figma want to authorize a class of blockchain common stock?

Well, this excerpt from Tekedia’s article on the Figma IPO explains that tokenization of securities has a lot to recommend it if you’re looking to attract retail investors to a pricy stock or facilitate more efficient trading and settlement:

Tokenized equities, issued on a blockchain, could enable fractional ownership of Figma’s stock, lowering barriers for retail investors. This democratizes access to high-value stocks, traditionally reserved for institutional or high-net-worth investors. Blockchain-based shares could reduce settlement times and intermediary costs compared to traditional stock exchanges, leveraging smart contracts for automation and transparency.

The article also notes that Figma mentioned the possibility of using tokenized shares for employee compensation, which suggests that it may align with tech industry trends toward using crypto-based incentives to attract talent.

– John Jenkins