Last summer, Blackbird, one of Australia’s largest venture businesses, listed the value of one of its most valued holdings, Sydney-based design platform Canva. Valued at $40 billion by investors in a $200 million round in Fall 2021, Blackbird has adjusted its own valuation of the company by 36% to $25.6 billion.
Now T. Rowe Price — the mutual fund giant that began aggressively investing in late-stage startups nearly a decade ago, continued to fund them through the pandemic, and led to that $40 billion round in 2021 — has surpassed the value of his stake in Canva even more dramatically, downgrading it by a whopping 67.6%. (T. Rowe’s Blue Chip Growth Fund, which owns several classes of Canva stock but mostly Series A stock, has $99.1 million invested in Canva to date and states in its most recent prospectus, dated March 31, that it which now values shares on a cost-adjusted basis of $32.1 million.)
A spokesperson for Canva, who was asked for comment earlier today, responded: “Overall, despite the broader market conditions, our metrics continue to move rapidly in the right direction. We just passed 135 million monthly users, $1.5 billion in annualized revenue, and have completed our sixth year of profitability.”
T. Rowe’s “changes in valuation are the result of [Canva] are valued at market value compared to our publicly traded peers,” the spokesperson said.
T. Rowe’s investment in Canva represents a miniscule amount of money for the sprawling investment firm. The Blue Chip Growth Fund had approximately $53 billion in assets under management at the end of the first quarter of this year, down from $63 billion a year ago, in June 2022.
Still, it’s notable that one of the smartest asset managers in the US thinks that a company that was for a time the fifth most valuable startup in the world is now worth much less – essentially $13 billion, not $40 billion.
Asked if Canva has adjusted its own independent 409A rating to match T. Rowe’s rating – after all, T. Rowe’s markdown is just his opinion – Canva’s spokesperson said his rating doesn’t match T. Rowe’s. Rowe, but declined to comment further.
Of course, Canva is far from alone in being emphatically downgraded by its backers after it soared to new valuation highs in 2021. Stockholm-based buy-now-pay-later provider Klarna saw an even steeper markdown a year ago, dropping 85% from the $45.6 billion valuation it was assigned in 2021 to $6.5 billion.
Klarna, which proactively accepted its downgraded valuation, has since tightened credit terms and cut costs, including through repeated layoffsand says it is now “on track” to reach monthly profitability in the second half of the year.
Like so many other outfits right now, both companies are actively being transformed by – and looking to capitalize on – generative artificial intelligence.
In a press release late last week, Klarna attributed some of its current momentum to OpenAI, saying that an integration with its large language model “accelerates Klarna’s evolution into a digital financial assistant.”
In an effort to maintain its own leadership in the world of collaborative graphic design, Canva has also integrated generative AI into its product suite. term investment and acquisition.
While Canva also partly relies on great big language models — it uses them piecemeal, says spokesperson — co-founder and CEO Melanie Perkins told FC it has deliberately relied less on the work of others so it can promise users that “ everything you create in Canva is yours.”
As for the impact of AI on Canva’s valuation going forward, that remains to be seen. While public shareholders will ultimately decide what they think the company is worth, a bid is not imminent, at least not yet.
Asked about a possible IPO, Canva’s spokesperson said today that there are no plans ahead. Meanwhile, Canva co-founder and COO Cliff Obrecht (who is married to Perkins) suggested to Barron’s in March that it’s very important to the now 11-year-old company.
“It’s not the right market to go out right now. But it’s clearly becoming an inevitability at our size,” he told the outlet. “It’s on the horizon, but not on the approaching horizon.”