Canva eyes $US1.5b share sale despite valuation headwinds

Australian software giant Canva is nearing a $US1.5 billion ($2.27 billion) share sale in what would be one of the largest secondary transactions in global technology history.

The Age and The Sydney Morning Herald understand that the share sale, from current and former Canva employees, would value the company at $US26 billion and would allow current and former employees as well as existing investors to sell shares to new investors.

“The transaction is still in the final stages of closing so this number may move around slightly,” a person close to Canva who was not authorised to speak publicly told this masthead.

Canva remains the flag bearer for the Aussie start-up scene, despite global valuation headwinds.Credit: Louie Douvis

“Canva has had exceedingly high interest from quality, long-term and blue-chip investors.”

The sale was first reported by Bloomberg, and the source said Canva had a $US1 billion target and that the round was significantly oversubscribed.

They said Canva’s $US2 billion in annualised revenue meant it was now growing faster than any public software company.

The buying and selling of illiquid shares in privately held tech companies, a concept known in the industry as secondaries, enables existing funds and early employees to realise returns ahead of an initial public offering.

The company, which last year celebrated its 10th birthday and which offers online design and collaboration tools, declined to comment.

Last August, Canva investor Blackbird sold some of its stake in the company to US investors including Coatue Management and ICONIQ Capital, the latter of which functions as a family office for the likes of Mark Zuckerberg, Sheryl Sandberg and Jack Dorsey.

Blackbird’s first fund invested $3 million into Canva a decade ago; that shareholding is now worth over $1 billion.

Canva co-founders (from left) Cliff Obrecht, Cameron Adams and Melanie Perkins.

The software company has defied the headwinds that have buffeted the global technology sector, as rising interest rates led to depressed valuations and widespread lay-offs.

Canva’s implied valuation is down 35 per cent from a peak of $US40 billion in September 2021 but co-founder Cliff Obrecht last year described the valuation as “solid” compared to other software companies, many of which have been forced into mass lay-offs due to the deepening tech downturn.

Obrecht started Canva with wife Melanie Perkins in 2012. The pair are now two of Australia’s wealthiest people. About 170 million people globally use Canva’s design software every month. The company added more monthly active users in the past year than in its first nine combined.

“I think all things considered with most tech companies down more than 50 per cent, I think the valuation is solid,” Obrecht told this masthead last August in an interview to coincide with Blackbird’s share sale.

“What I think it speaks to most is the confidence investors have in Canva to grow beyond this. They’re obviously deploying large sums of money in order to see a return on that, and so it really speaks to their confidence in the business that it will continue to grow, and that trajectory will continue to accelerate.

“(The valuation) comes up in the media and no one is immune to a market drop of that significance. But it largely doesn’t impact our business. We’re continuing to hire and we continue to be really rigorous around who we hire, which we always have been, and which has led us being one of the few companies not having to do mass lay-offs and continuing to hire through this downturn.”

Canva is expected to launch a public listing in 2025 or 2026, a move that Obrecht said would probably be on New York’s Nasdaq, which Atlassian chose for its blockbuster IPO nearly a decade ago.