Last summer, Blackbird, one of Australia’s largest project operations, downgraded one of its most valuable stakes, in Sydney-based design platform Canva. Valued at $40 billion by investors in a $200 million round in the fall of 2021, Blackbird revised its own valuation of the company up 36% to $25.6 billion.
Now, T. Rowe Price — the mutual fund fund that began investing aggressively in late-stage startups nearly a decade ago and has continued to fund throughout the pandemic, resulting in a $40 billion round in 2021 — has priced down its investments. Canva share more dramatically, adjusted downward by a whopping 67.6%. (T. Rowe’s Blue Chip Growth Fund, which owns several classes of Canva shares but mostly Series A shares, has so far invested $99.1 million in Canva and states in its most recent prospectus, dated March 31, that it now values these shares over Adjusted cost basis at $32.1 million).
When asked for comment earlier today, a Canva spokesperson responded: “Overall, despite broader market conditions, our metrics continue to move rapidly in the right direction. We have just passed 135 million monthly users, $1.5 billion in annual revenue, And we achieved our sixth year of profitability.”
T. Rowe “Changes in evaluation are the result [Canva] They are marked in the market when compared to our publicly listed peers,” the spokesperson said.
T. Rowe’s investment in Canva represents a handful of cash for the sprawling investment company. The company’s 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 earlier, in June 2022.
However, it is worth noting that one of the smartest asset managers in the US believes that a company that was for a while the fifth largest startup on the planet is currently worth much less – $13 billion, not $40 billion.
Asked if Canva had adjusted its independent 409A assessment to align with T. Rowe’s — T. Rowe’s downgrade is really just an opinion, after all — a Canva spokesperson said its assessment did not match T. Rowe’s but declined to comment further. .
Of course, Canva is far from alone in being definitively singled out by its backers after it soared to new valuation heights in 2021. Stockholm-based buy-now-pay-later provider Klarna saw steeper cuts last year, dropping by 85% from the $45.6 billion valuation set in 2021 to $6.5 billion.
Klarna, which has preemptively accepted its downgraded rating, Since then, lending standards have been tightened and costs have been reduced, including through Frequent layoffsAnd she says that now “steady pace” to reach monthly profitability in the second half of the year.
Like many other outfits right now, both companies are actively transforming through – and looking to capitalize on – generative AI.
In a press release late last week, Klarna attributed some of its current momentum to OpenAI, saying that integration with its large language model “accelerates Klarna’s evolution into a digital financial assistant.”
In an effort to maintain its leading position in the world of graphic design collaboration, Canva has also integrated generative AI across its suite of products, telling Fast Company in March that much of what is now being instilled throughout the company has been built in-house during a long-term investment and acquisition. .
Although Canva also relies in part on large language models — it uses them piecemeal, says its spokesperson — co-founder and CEO Melanie Perkins tells FC that it relies less on the work of others that it can promise users that “anything you want can be created in Canva is yours.”
As for the impact of AI on Canva’s evaluation in the future, that remains to be seen. While the public shareholders will ultimately decide what they think the company is worth, the offer was not made, not anyway.
When asked about a potential IPO, a Canva spokesperson said today that there are no plans on the horizon. Meanwhile, in March, Canva co-founder and COO Cliff Obrecht (who is married to Perkins) suggested to Barron’s that it was now top of mind for the now 11-year-old company.
“It’s not the right market to go out right now. But it’s clearly becoming an imperative at our scale.” “It is on the horizon, but not on the imminent horizon.”