Investing in Canva: Unveiling the Canvas of Next-Gen Visual Communication

Our Partnership With Canva

At Premji Invest, we are incredibly excited to be announcing our partnership with Melanie Perkins and Cliff Obrecht, and the rest of the Canva team. Canva has become the iconic visual communication layer for today’s generation of “Citizen Designers,” and we’re proud to be partnering with the team as they prepare to serve the next.

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When we first met Canva, we felt that we were already familiar with its product suite, having come across its docs, presentations, and social templates in a variety of settings. But when we looked under the hood, we were astonished by A) The depth of its product suite underpinned by its gen AI-powered Magic Studio, B) Its remarkable product-market fit within first Consumer, then Enterprise, and C) Its exceptional execution in building a durable, growing, at-scale business with viral and highly collaborative DNA.

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In a world where the emergence of foundation models have enabled rapid, high-volume, multi-modal content generation used across increasingly diverse use cases, we believe that value will accrue to the distribution endpoints over the models themselves. Amid the hyper growth of LLM/diffusion model tools and wrappers in the space, we think the world needs a one-stop-shop for easy-to-use, end-to-end content creation, collaboration, organization, and distribution. Good thing Canva is exactly this.

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Canva is a visual communication platform, AI Studio, and asset repository that has reached a scale of distribution that few match. Its broad product suite (social, docs, whiteboarding, presentation, video, etc), enhanced by its gen AI-powered features, enables content generation, iteration, and distribution across modalities. Its asset repository also enables the organizing, sharing, and repurposing of said content for publishing across channels and use cases.

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We believe the future of content generation via LLMs is multi-modal, and Canva fits squarely into that viewpoint - the company has proven that its utility holds true across modalities, form factors, and disciplines as the need for visual communication expands.

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If social platforms such as Instagram and Snap catalyzed the Visual Renaissance, we think foundation models are powering the Visual Revolution - which we believe Canva is well equipped to underpin. We’re humbled to be partnering with Canva on their journey to serving 1 in 5 internet users.

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Why We’re Excited: Our Canva Thesis is Rooted in Product-Market Fit

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Here at PI, we like to say that we invest in companies that display “violent” product-market fit. For us, Canva has made such a case - particularly highlighting the importance of ease-of-use, depth of product suite, and viral, collaborative DNA. Canva has a product-led, freemium go-to-market motion, and its moat has only compounded with increasing network effects. When we took a look under Canva’s hood, we unearthed metrics that only enhanced our conviction in its product-market fit among the “Citizen Designers” it has created.

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To start, Canva fits squarely into our mandate of partnering with true n of 1, at-scale businesses. Few companies have been able to build a brand on par with Canva, with the virality and network effects of a social platform (>170M MAUs across >190 countries) and the repeatability, expansion, and profitability of the most highly valued public SaaS vendors (as a Rule-of-50 at-scale business).

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Despite being an at-scale business, Canva’s top-of-funnel for free subscriber acquisition continues to accelerate - while maintaining a stellar free-to-paid conversion track record. Its market reception is not only displayed in customer willingness to pay, but in its best-in-class retention metrics, reactivation rates of churned users, and expansion rates. Canva’s engagement is also strong as ever - MAUs as a percentage of QAUs is increasing. Total monthly web visits are also increasing, and percentage of existing vs new users is increasing. The platform’s utility has proven to be so strong that it fuels viral growth mechanisms with nearly entirely organic & direct user acquisition, building a highly efficient at-scale business.

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Canva is also endemically collaborative with compounding network effects - proven by its product-market fit within both SMBs and larger organizations. Canva has penetrated the enterprise in a defensible grounds-up user adoption motion, even before offering an Enterprise SKU or ETLA. We learned that employees are purchasing Canva through corporate cards and personal accounts, and free users sit at a multitude of that base - positioning Canva well for introducing ETLA to the enterprise. Even with its quasi “seat-based” model via Teams or Pro accounts in a challenged software environment, Canva has maintained a best-in-class NRR across its enterprise base as the number of users across functions expands. Whether it be internal KPIs tracking, data visualization, or building a social campaign, Canva has proven our view that design has over time migrated from a siloed to collaborative process. Canva taps into the democratization of design, and the need to work together across functions and use cases - for example, Product Managers, Product Marketers, Developers, and UI/UX Designers. As the process iterates between blueprint, assets generation, brand specs incorporation, and development, using one Canva file to communicate enhances efficiency and productivity.

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Canva is the Distributor of the Generative AI Visual Suite

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Each of Canva’s assets across its vast product suite (social, docs, whiteboarding, presentation, video) is a highly effective mechanism to distribute the generative AI content powered by its Magic Studio. In this way, Canva enables both the creation and the distribution of gen AI content across text, image, and video. If a Citizen Designer is looking for a one-stop shop for the end-to-end gen AI-enabled communication - Canva is that platform.

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We believe that value in consumer & prosumer gen AI accrues to distribution endpoints versus foundation models. Foundation models themselves provide generated content, but not the mechanism or platform to distribute that content and make it useful. Canva has both - its Magic Studio marketplace strategy leverages Canva’s in-house LLM as well as integrates with third-party foundational models (DALL-E, Midjourney, Runway) to generate copy, images, and video according to brand voice. Data from Canva’s existing templates base puts it at a competitive advantage across social, brand, marketing, advertising, sales, R&D, etc. At the same time, the ability to choose the model that best fits your use case drives defensibility to the platform itself. In the first month of its release, ⅓ of Canva’s social users were already leveraging its AI-based Magic Studio features.

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In addition to generating and distributing content, Canva’s Magic Studio also serves the “middle mile,” making it a truly end-to-end AI Studio. Canva enables the collaborative editing process. Magic Edit is an AI-enabled photo editor, and Magic Animate allows a user to animate designs with one click. Magic Switch enables the seamless integration of modalities and form factors, and resulting collaboration across disciplines.

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We believe that a core reason Canva is well positioned to continue to succeed is that Canva’s platform has been inherently “multi-modal” since inception - its ability to combine text, images, graphics, logos and video into a visually appealing form-factor of choice is its bread-and-butter. Input any asset comprising a brand’s visual identity (“vis id”), whether it be font, hex code, icon, copy, logo - and output a brand-specific digital communication template (social post, presentation, doc, video) that can be leveraged across channels and use cases (social BCG, email/SMS campaigns, newsletters, billboards, etc).

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The use of these templates both internally and externally have built tremendous virality for Canva, and fuel its moat as a distribution endpoint. Within a given org, many Canva users take both the inputted and outputted assets and build brand libraries - this has assisted with stickiness of its solution as Canva has become a greater repository of brand files that can be easily stored, referenced and repurposed into perpetuity, across functions. Outside a given org, Canva users have created a templates-sharing culture in an open-source fashion - where Canva has become a template hub within the Citizen Designer community. This forum has built astounding virality for Canva, with sustained best-in-class organic acquisition.

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Canva’s rise was on the backs of the rise of social - the ubiquity of which turned everyone into a content creator. If Canva’s bread-and-butter is collaborative and easy-to-use, intuitive functionality, its Magic Studio supercharges its current Citizen Designers base, enhances its positioning, and broadens the market even further. For example, despite continued growth within its core Social product, Presentations MAUs have reached the scale of Social users, and Video and Docs aren’t far behind. Whiteboards, which sits as one of the most nascent collaboration products, has already eclipsed Figma MAUs since its release <1.5 years ago. We believe Canva’s utility only increases across modalities, use cases, and users.

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Conclusion

Our investment in Canva is a testament to our belief in Canva’s ability to serve the next generation of Citizen Designers in the world of gen AI. By backing Canva, we are not only aligning ourselves with a market leader but also investing in a more colorful, dynamic, and engaging future where more and more people have the tools they need to thrive in a digital world. With Canva, we’re excited to continue painting the blank canvas of the future that knows no bounds!