Canva's Valuation Marked Down by T. Rowe Price
T. Rowe Price, one of the largest investment companies in the world, has marked down the value of its stake in Sydney-based design platform Canva by 67.6%. In a $200 million funding round in fall 2021, investors valued Canva at $40 billion. However, Blackbird, one of Australia's largest venture capital firms, has marked down the value of its stake in Canva by 36% to $25.6 billion. T. Rowe Price, which led the $40 billion funding round, has now marked down the value of its stake even further to essentially $13 billion.
Canva Downplays T. Rowe Price's Assessment
A spokesperson for Canva downplayed T. Rowe Price's markdown, pointing out that Canva is a profitable company with healthy case reserves. The company is focused on building a sustainable and enduring company for the long term. The spokesperson said Canva is experiencing rapid growth across all its metrics and recently surpassed 135 million monthly active users. The company is prepared to double down on key initiatives such as expanding its team, launching new products, and innovating with AI technology. Canva has not adjusted its own, independent 409A valuation to match up with T. Rowe's assessment but remains confident in its growth potential.
Canva and Klarna Reflect Trend of Markdowns
Canva is not alone in being marked down by its backers. Many companies are experiencing markdowns after soaring to new valuation heights in 2021, such as Stockholm-based buy-now-pay-later provider Klarna, which saw an 85% markdown in 2021. Klarna has since tightened its lending standards, slashed costs, and integrated with OpenAI to become a digital financial assistant. Canva and Klarna are both actively transforming their companies with generative AI technology. Canva has integrated AI technology across its product suite, while Klarna has credited OpenAI for accelerating its evolution.
The Impact of AI on Canva's Valuation and Future IPO
Canva's co-founder and CEO Melanie Perkins has promised users that "anything you create in Canva is yours," which has led to customer satisfaction and high usage. Canva's reliance on in-house development and acquisition over the work of others means the company can maintain that promise. The impact of AI on Canva's valuation going forward remains to be seen, but Canva is ready to continue its growth and innovation with AI technology. While a public offering is not yet forthcoming, Canva's spokesperson said it's an inevitability for the 11-year-old company.
Advice for Investors
The markdown of Canva's valuation by T. Rowe Price and Blackbird is a reminder to investors that valuation is not always indicative of a company's true value or growth potential. Companies can experience fluctuations in valuation due to many factors, such as market conditions and markdowns by investors. Investors should conduct thorough research to understand a company's underlying business model, including its use of technology, potential for growth, and long-term sustainability, before investing.
