On Dec. 18, a $20 billion deal by Adobe, the software giant, to buy Figma, a San Francisco start-up darling, fell apart after more than a year of regulatory scrutiny.

In a blog post that day, Dylan Field, Figma’s chief executive and co-founder, painted an optimistic picture of what would come next. “Figma’s best, most innovative days are still ahead,” he wrote.

Behind the scenes, the start-up, a design platform, is picking up the pieces. In recent weeks, Figma said it had reset its internal valuation to $10 billion — half of what Adobe planned to pay for it. Some employees, who were set to reap enormous windfalls, are deflated. Figma offered severance to workers who wanted to quit, with just over 4 percent, or around 52 workers, taking the offer, said Michael Amodeo, a company spokesman.

Figma is also grappling with a tech industry that has been changed by a frenzy over artificial intelligence. It is trying to continue a breakneck pace of expansion to win customers, recruit new workers and appease investors, according to 15 current and former employees and investors, many of whom declined to be named because of nondisclosure agreements.

“It really does feel like the rug got pulled out from underneath you,” said Jason Pearson, who left Figma in 2021 and owns company stock.

Figma is a case study of what happens when a start-up on the cusp of being bought confronts newly assertive regulators — and the deal collapses.

In Washington, the Federal Trade Commission and the Justice Department have raised questions about many deals in recent years, suing to block some and toughening guidelines for merger reviews. British regulators have increasingly targeted tech deals by focusing on their future plans. In the European Union, regulators have demanded that companies commit to making changes if they want their mergers to go through.

The fallout has been expansive. Last month, Amazon called off a $1.4 billion acquisition of iRobot, the maker of Roomba vacuums, after U.S. and European regulators warned that they would challenge the deal. The chief executive of iRobot stepped down, and the company laid off 31 percent of its staff.

In December, Illumina, a gene-sequencing machine company, agreed to sell Grail, a developer of cancer tests that it bought in 2021 for $7.1 billion, after battling U.S. and European regulators. The F.T.C. is also scrutinizing minority investments, such as Google’s, Amazon’s and Microsoft’s backing of the A.I. start-ups Anthropic and OpenAI.

Figma and Adobe scrapped their deal after Britain’s Competition and Markets Authority found that the merger would eliminate competition for product design, image editing and illustration software. U.S. and European regulators had also studied the acquisition.

The ripple effects are being deeply felt in Silicon Valley. For decades, investors there have poured money into fast-growing start-ups, hoping they would reap outsize returns when the firms went public or were sold. They then plowed some of that money back into creating new start-ups.

“In the Silicon Valley ecosystem, you invest in your friends’ companies,” said Terrence Rohan of Otherwise Fund and one of Figma’s earliest investors. “You take your financial success and pay it forward.”

Figma’s investors said they remained optimistic about the company’s prospects. They pointed to its growing revenue as the leading provider of software that designers and engineers use to make digital products.

Figma has also not touched roughly $290 million of its venture funding, two people familiar with its finances said, and Adobe paid it a $1 billion breakup fee. Most important, investors said, the company aggressively built new products and features — including A.I. features — while waiting for the sale to Adobe to close.

“We probably wasted a bunch of Delta Sky Miles flying back and forth across the ocean for the last 18 months, but we certainly haven’t taken our eye off the ball,” said Andrew Reed, an investor at Sequoia Capital who sits on Figma’s board.

Asked for comment, Figma pointed to Mr. Field’s blog post about the deal. Adobe declined to comment. Forbes earlier reported Figma’s internal valuation and severance offers.

‘Who the heck’s Adobe?’

Mr. Field and Evan Wallace, a software engineer, founded Figma in 2012 with the simple idea that tech advancements in web browsers would make it easier for people to design websites and apps online, rather than with clunky, expensive software. The start-up’s products, available for free or with a subscription, allow designers to create, edit and share designs.

Adobe, which makes design software including Photoshop and Illustrator, soon noticed Figma. At one point, Adobe tried to move into Figma’s territory with a product called XD, but it wasn’t as popular.

Figma’s employees, called Figmates, saw themselves as scrappy up-and-comers. In a theme song they sang at group gatherings, one rap verse featured the lyric: “Ten or 15 years from now, people are going to say: ‘Who the heck’s Adobe? Figma’s here to stay!’”

In the spring of 2020, Scott Belsky, Adobe’s chief product officer, tried buying Figma, according to regulatory filings. Mr. Field said no. A year later, Shantanu Narayen, Adobe’s chief executive, tried again. Mr. Field declined.

By 2022, Figma had expanded into more aspects of digital design. It has said it was on track for $400 million in “annual recurring revenue,” a tech term of art that extrapolates monthly revenue to a year.

Its investors, which also include Kleiner Perkins and Index Ventures, crowed about the start-up as a “once in a generation” company. Figma, privately valued at $10 billion, had informal plans to go public.

In June 2022, Adobe offered to buy Figma again, this time for $20 billion. Figma solicited another buyer and aimed for a higher price, according to a filing, but ultimately accepted the $20 billion.

A week before the merger was announced that September, Adobe canceled work on “Project Spice,” a new product that regulators said would have put it in direct competition with Figma.

Celebration, then limbo

When Adobe and Figma unveiled their deal on Sept. 15, 2022, Mr. Field declared that the combination would be “a chance to reimagine what creative tools look like” and a way to achieve Figma’s goals even faster.

Many Figmates could hardly believe their good fortune. Joining a start-up is often a leap of faith. Employees can walk away with worthless stock, having squandered years of their lives — but sometimes they luck into life-changing wealth.

“Everybody that works for a tech company hopes for this to happen,” Mr. Pearson said.

Yet the deal was far from complete. Over the next year, Figma and Adobe worked to comply with regulatory investigations into their merger in Europe and the United States.

During that time, Figma tried to grow faster, partly to show it was worth the $20 billion, two former employees said. The company hired 500 people, launched a bevy of features and organized an 8,500-person conference in San Francisco within six months.

An employee survey after the conference last June showed a spike in feelings of burnout and of being overwhelmed by deadlines, two people familiar with the situation said. Mr. Field later said running the company while trying to close the deal with regulators felt like having two or three jobs at a time.

Some recent hires were also stuck. Stock was a large part of their compensation, but the new employees who left before the deal closed would forfeit their shares, including those they had vested, or earned, after working at the company for a year, according to internal communications viewed by The New York Times.

That policy, designed to minimize taxes, applied to workers who had joined in May 2022 or later. Mr. Amodeo said withholding stock grants for tax reasons was standard for companies with a pending deal.

In June, Britain’s Competition and Markets Authority weighed in. The regulator published a report arguing that Adobe and Figma could be rivals, which meant a deal would reduce competition.

For a remedy, the regulator proposed in November that Adobe divest a crown jewel of its business, such as Photoshop or Illustrator — or that Figma spin off its main design offering. Adobe rejected those options.

“Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently,” Adobe’s Mr. Narayen said when the companies abandoned the deal in December.

Figma’s employees absorbed the news that they wouldn’t see a windfall. Some, who had put their lives on pause waiting for the deal to close, were relieved to have clarity.

“For anyone that’s been through an acquisition, you’ll know how the limbo period can be the toughest,” Hugo Raymond, a Figma employee, wrote on X.

Mr. Pearson said he had tried not to dwell on the value of his Figma shares, knowing the deal might fall apart. But it was difficult, he said. He had started an indie music record label that he planned to support with earnings from his stock.

“You start to psychologically and emotionally plan for a very different future,” he said.

Moving on

Figma has forged ahead. The company recently made a tool for developers, called DevMode, widely available and has promoted A.I. enhancements to its products.

Some employees have left. Amanda Kleha, Figma’s longtime chief customer officer, departed, as did the Figmates who took the recent severance offer.

Employees and early investors expect Figma to let them sell a portion of their shares this year in what is known as a tender offer, though no plans have been made. The company’s best option for a payout now is to go public, which could take years.

Figma’s investors have resolved to be patient, while learning a lesson for their other start-ups. The bar is now higher for pursuing deal talks, said Sequoia’s Mr. Reed, adding that a breakup fee is crucial.

Silicon Valley’s circle of life — which recycles money from acquisitions into new companies — remains stuck. Adam Nash, an entrepreneur and Figma investor who has used his earnings from start-up stock to back more than 130 companies, said he expected such deals to return in a few years.

“But they will not happen now,” he said.