Why CFO departure is Canva’s greatest test yet

Australian start-up darling Canva is facing arguably the greatest challenge of its decade-long existence, as is the local technology sector that has allowed it to thrive.

One of Canva’s most senior leaders, chief financial officer Damien Singh, quietly departed the design software company this month amid an internal investigation into allegations of inappropriate behaviour.

Canva, led by Melanie Perkins, Cliff Obrecht (left) and Cameron Adams, is widely seen as an IPO prospect but has not revealed any timing.Credit: Louie Douvis

The current mood among many of its 4000 or so employees is one of angst and frustration, as what began as an internal company matter has exploded into public view.

Executive turnover ahead of an IPO is relatively common, as young start-ups look to bolster their leadership credentials. But messages posted to an anonymous professional community suggest there had been complaints of inappropriate behaviour made against Singh, who had been with Canva since 2016.

A source closed to Canva said Singh’s transition out of the company was already well underway before the online posts came to the attention of executives, and when notified of an investigation he resigned immediately.

“Damien has played an instrumental role in our journey and we appreciate the foundations he’s built to achieve the success we’ve had to date,” a spokesman said in a statement to reporters when news of Singh’s departure first broke. “As we now move into the next chapter, we mutually agreed that now is the right time to bring in a CFO with a long track record of growing public companies at global scale.”

In his own letter to staff, Singh mentioned nothing of the allegations, instead saying leading the finance team had been a “huge professional highlight and an honour.”

The events highlight not only the issues around the alleged behaviour but also transparency, which has been lacking, both to employees and to journalists covering the story.

The real facts of the matter - that Singh resigned earlier than planned after the allegations surfaced, and as the company began an internal investigation - took days to come out, and only after questions were asked by The Australian Financial Review and others who cannot be named for legal reasons.

This masthead is not suggesting that Singh is guilty, just that allegations have been made. Singh was contacted for comment but did not reply.

Damien Singh resigned as Canva CFO this month.Credit: LinkedIn

“Creating a safe environment for everyone is our number one priority,” a Canva spokesman said. “We have a zero-tolerance policy for inappropriate behaviour and we’re fully committed to thoroughly investigating and actioning any instances of this.”

What happens next represents a critical moment for Canva and for the Australian technology sector at large.

The company is currently worth about the same as Telstra, with a valuation of around $39 billion. Its success or otherwise will help shape the fortunes of Australia’s technology sector, as Atlassian had before it. The company has indicated that it will likely list on the Nasdaq in the US, which would cement its position as a Sydney-born global technology heavyweight.

To date, Canva had managed to successfully straddle the line between scrappy and serious.

“We’ve always been scrappy,” co-founder Melanie Perkins told me last year. That’s been a large part of the company’s charm and what has allowed it to innovate and grow so quickly.

But the company will no doubt be keen to appoint a CFO with the experience - and the temperament - to steer its next steps as it looks to woo investors, particularly in the US.

A source close to Canva who is not authorised to speak publicly said the company is already casting the net widely for Singh’s successor, and may consider a CFO based in the US.

The matter also represents a pivotal moment for Australia’s start-up sector more broadly. This is a sector that for a long time now has had to grapple with the uncomfortable truth that despite all of its lustre - and growing economic heft - issues such as inappropriate behaviour are still rife.

For a sector that often demands better of the media, members of Australia’s start-up scene need to be far more transparent - whether they’re dealing with journalists or their own employees - if they’re to be taken as seriously as their economic importance demands. New initiatives like Grapevine - a platform for members of the sector to anonymously share their stories - are a welcome step.

Greater transparency will lead to accountability, and a safer and stronger start-up sector. Start-ups like Canva are known for being fun and exciting places to work, but this month’s events have revealed the ugly truth that they aren’t immune to some of the worst aspects of corporate culture. The sector’s diversity numbers are still appalling and won’t improve until the culture improves.

Many women have either left the technology start-up sector or avoided it altogether due to issues around inappropriate behaviour, and the sector is poorer for it.

For Canva, how its co-founders handle the current fallout, as well as who they select as Singh’s successor, will serve as a litmus test if the company is ready to be treated as the mature, grown-up tech company that it aspires to be.

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