AI start-up Leonardo earned $1.25 million in the month before it accepted Canva’s buyout offer, but was finding it more challenging to grow users and faced hundreds of millions in capital costs to build new image-generating software.

The company’s lead investor, Blackbird Ventures, revealed Canva had bought Leonardo for $US250 million ($370 million) in a confidential note issued this week confirming most of the deal was struck in shares.