Exploring Tokenized Equity Through Figma’s S-1 Filing

While Figma’s IPO has dominated tech headlines over the past week (and for good reason), there’s one small detail, covered earlier by PitchBook, that most investors, us and many of our peers included, missed.

It’s buried in a clause from their S-1: the right to issue tokenized shares. Direct from page 84 of the filing:

“Furthermore, we have authorized the issuance of undesignated preferred stock and blockchain common stock that our Board of Directors could use to, among other things, issue shares of our capital stock in the form of blockchain tokens, implement a stockholder rights plan, or issue other shares of preferred stock or common stock.”

What are tokenized shares, why did Figma include this language, and what could it mean for a finance industry and more specifically private markets, that has been largely resistant to the broader decentralized finance movement?

What Are Tokenized Shares and How Do They Relate to Private Markets?

In simple terms, tokenized shares (or tokenized securities) are digital tokens on the blockchain that represent ownership of real-world equity. McKinsey defines tokenization as “the process of issuing a unique digital representation of an asset on a blockchain.” In this case, the asset is a share of stock. Each token carries the same rights and properties as a traditional share, but ownership is recorded and transferred on a blockchain ledger rather than through paper certificates or centralized databases. Importantly, a tokenized share is not a different asset. As SEC Commissioner Hester Peirce recently stated, “tokenized securities are still securities,” and remain subject to the same legal and regulatory frameworks.

While speed and security are of course built-in advantages to decentralized finance, the most significant advantage of tokenized shares may lie in private markets with the potential to improve liquidity in the secondary market. While Figma of course did this as part of their IPO, this highlights a trend that has the potential to permeate into early stage, private companies who wish to offer employees and early investors a path to liquidity without the need for a traditional exit. By leveraging tokenized shares, these startups could enable controlled secondary sales on digital platforms much more easily.

It’s no secret that private equity has long been plagued by lower liquidity compared to public markets, with long holding periods and limited buyer access defining the category. Tokenization could streamline this by enabling faster, more efficient transactions through digital platforms that bypass investment banks, lawyers, and brokers, while automating compliance through embedded regulations. By reducing friction and expanding access, tokenized shares could create a more accessible market for investors, employees, and early shareholders.

Tokenization also allows for fractional ownership. A single share can be divided into smaller units, which means investors can buy portions of high-priced shares with less capital. Someone who cannot afford a $500 share might instead purchase one-tenth of that value. While this feature lowers the barrier to entry and broadens access to private markets to more investors, especially retail investors, it is the improved liquidity and market efficiency that stand out as the most transformative aspect of tokenized equity.

Why Did Figma Include Tokenized Stock in Its S-1?

Figma’s decision to authorize a class of “blockchain common stock” in its IPO filing is unusual. Few tech companies have taken steps to prepare for issuing tokenized shares at the time of going public. While Figma has no immediate plans to do so, this move is most certainly a way to keep future options open.

By including this clause, Figma is signalling openness to new financing models. In the future, the company could use tokenized shares for things like employee compensation or retail investor access. With authorization for up to 100 million blockchain shares, it has laid the legal groundwork to act quickly if the opportunity arises.

This also reflects the mindset of Figma’s leadership. CEO Dylan Field has shown interest in blockchain and crypto, and the company held Bitcoin on its balance sheet before the IPO. That comfort with decentralized technology may have contributed to the decision to include tokenized stock language.

There may also be a broader strategic reason. In 2025, US regulators began discussing ways to expand retail investor access to private markets. Tokenized shares could offer a compliant path to broader participation and easier trading. Figma’s move may be a way to align with that trend and position the company to take advantage of future changes in market structure and regulation.

A Turning Point for Fractional Ownership and Access

If other companies follow Figma’s lead, tokenization could meaningfully expand access to equity ownership. Traditionally, private tech company shares have been limited to institutional investors or high-net-worth individuals. Even after IPO, high share prices can limit participation. Tokenization allows shares to be divided into fractional units, making it easier for more investors to buy into companies they care about.

In venture capital, where companies often stay private for years, tokenized equity could improve liquidity. Early employees and investors often hold valuable equity that is hard to sell. Tokenization could enable smaller, compliant trades on regulated digital exchanges, broadening access and making secondary transactions more efficient. McKinsey notes that tokenization has the potential to increase liquidity by opening new trading channels for traditionally illiquid assets.

Tokenized shares can also be designed to comply with investor eligibility rules and embed restrictions such as holding periods or transfer limitations via smart contracts. In Figma’s case, any future issuance would likely retain the same rights as traditional shares, only with ownership tracked on a blockchain, allowing faster, global transfers.

If adopted more widely, tokenized equity could help blur the line between public and private markets. Startups could remain private while offering limited tradability among approved investors, providing some price discovery and liquidity ahead of an IPO or liquidity event. With Figma referencing tokenization in a public filing, the concept gains credibility. As PitchBook noted, real-world asset tokens may be reaching a point of broader acceptance, particularly as access to private markets becomes a growing focus.

Impact on Secondary Markets and Venture Liquidity

One of the most immediate impacts of tokenized equity, if adoption grows, could be on the venture secondaries market. Capital in startups is typically locked up for years, with exits tied to IPOs or acquisitions. While secondary sales do occur, they are often limited, difficult to arrange, and mostly available to large institutional buyers. Tokenization could help by enabling private shares to trade more efficiently through digital platforms, lowering friction for both investors and early employees. Employees with vested equity could gradually sell portions of their holdings, and funds could trim positions over time, rather than relying on one major exit event.

This shift could make working at or founding a startup more appealing. If early team members know they have a path to partial liquidity before an IPO, it reduces personal financial risk and makes equity more meaningful. For founders, it eases pressure to rush toward a public listing just to provide investor or employee liquidity. What does this mean? The next brilliant engineer coming out of school or working in big tech is more likely to spin-out and build something new knowing that their exit timeline doesn’t need to be a major liquidity event. For us in the investor community, this means more, talented founders to back and more potentially generational companies being built.

There are still hurdles to address. Regulatory frameworks for trading tokenized securities are evolving, and compliance remains essential. Early attempts at tokenized exchanges struggled due to legal and adoption challenges. But momentum is building. Regulators are showing more openness, and financial institutions are investing in blockchain infrastructure. McKinsey projects tokenized asset markets could grow into the trillions by the end of the decade, pointing to a broader shift underway.

For the venture ecosystem, greater liquidity that doesn’t depend on a single exit event could be a meaningful improvement. It gives founders and employees more flexibility, makes startup equity more accessible, and helps align incentives in a longer-term, more sustainable way.

A Glimpse of Finance’s Future

Figma’s decision to include tokenized shares in its IPO documents may prove to be an early sign of change. While traditional finance has been cautious about blockchain and crypto, there is growing recognition that some aspects of the technology can improve the existing system rather than replace it. Tokenized shares are one such example, offering the potential for more efficient trading, broader access, and improved liquidity.

That said, many open questions remain. How will regulators respond? Will trading platforms be able to support tokenized securities at scale? And will other companies actually choose to issue them, or will this remain a theoretical option?

What Figma has done is open the door. By referencing blockchain-based stock in a public filing, it brings legitimacy to an idea that until now has largely stayed on the sidelines. If other companies, potentially those still private, adopt similar language or experiment with tokenized equity in areas like ESOP, we could see steady progress toward broader ownership and easier access to private markets.

Tokenization represents a gradual shift toward a more flexible and accessible financial system. While the benefits are clear, realizing them will depend on regulation, infrastructure, and investor trust. For now, Figma’s move offers a small and early sign of where things may be headed.