T. Rowe Price reduced his stake in Canva by 67.6%

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Blackbird, one of Australia’s largest venture capital operations, has reduced the value of one of its most valuable stakes, in the Sydney-based design platform Canva. Valued at $40 billion by investors in a $200 million round in fall 2021, Blackbird adjusted its valuation of the company by 36% to $25.6 billion.

Now, T. Rowe Price, the mutual fund giant that began aggressively investing in late-stage startups nearly a decade ago, has continued to fund them amid the pandemic and that led to that $40 billion round. in 2021, he reduced the value of his stake in Canva even more dramatically, adjusting it down by a whopping 67.6%. (T. Rowes Blue Chip Growth Fund, which owns several Canva stock classes but predominantly Series A stock, has invested $99.1 million in Canva to date and says in its most recent prospectus, dated March 31, that it now values ​​those shares on a cost-adjusted basis at $32.1 million.)

Asked for comment today, a Canva spokesperson downplayed the number, writing in an email that: As a profitable company with very healthy case reserves, we are in a fortunate position to continue to focus on building a long-term business. Regardless of the macroeconomic environment, we are well positioned to continue doubling down on key initiatives, including growing our team and expanding our AI and product innovation efforts.

The spokesperson added, We are seeing rapid and accelerating growth across all of our metrics, having recently surpassed 135 million monthly active users. It would be inaccurate to determine Canva’s valuation based on a single investor in isolation, and with our growth and pace of new product launches, we are confident that, regardless of market conditions, we will far exceed our last valuation as that the markets correct themselves and our growth continues.

T. Rowe’s investment in Canva represents a tiny amount of money for the sprawling investment firm. His Blue Chip Growth Fund had about $53 billion in assets under management at the end of the first quarter of this year, down from $63 billion a year ago in June 2022.

However, it is noteworthy that one of the most experienced wealth managers in the US thinks a company that was for a time the fifth most valuable startup on the planet is currently worth much less, essentially $13 billion not $40. billion.

When asked if Canva has changed their independent rating of 409A to match T. Rowe’s rating, T. Rowe’s markdown is really just his opinion, after all the Canvas spokesperson said his rating doesn’t match to that of T. Rowe, but declined to comment further.

Of course, Canva is far from the only one facing sharp criticism from its proponents after it soared to new valuation heights in 2021. Stockholm-based supplier Klarna, buy now, pay later, has seen an even steeper decline. steep a year ago, down 85%. from the $45.6 billion valuation assigned in 2021 to $6.5 billion.

Klarna, which proactively accepted its lower rating, has since tightened its lending standards and cut costs, including through repeated layoffs, and says it is now firmly on track to achieve monthly profitability in the second half of the year. ‘year.

Like so many other groups right now, both companies are actively transforming and looking to leverage generative AI.

In a press release late last week, Klarna attributed some of its current momentum to OpenAI, saying an integration with its large language model is accelerating Klarna’s evolution into a digital financial assistant.

In an effort to maintain its position as a leader in the world of graphic design collaboration, Canva has also integrated generative AI into its product suite, telling Fast Company in March that much of what is now infused was built in-house. through long investment and term acquisition.

While Canva also relies heavily on key large language templates, it uses them piecemeal, says co-founder and CEO of its spokeswoman Melanie Perkins told FC she intentionally relied less on each other’s work so that you can promise users that everything you create in Canva is yours.

His customers seem to like what they see. According to Canva, more than 200 million images have been generated with its text-to-image offering, more than 1 billion words have been typed with its AI text generator, and nearly 2 billion backgrounds have been removed with its background remover.

As for the impact of AIs on Canvas’s valuation in the future, that remains to be seen. While public shareholders will ultimately decide how much they think the company is worth, a bid isn’t forthcoming—not yet anyway.

When asked about a possible IPO, the Canvas spokesperson said today that there are no plans in sight. Meanwhile, in March, Canva co-founder and COO Cliff Obrecht (who is married to Perkins), hinted to Barrons that he now ranks first for the company for 11 years.

It’s not the right market to exit at the moment. But obviously, it becomes unavoidable at our size, he told the outlet. It is on the horizon, but not on the immediate horizon.