There are a lot of people talking to their accountant about capital gains tax for the very first time this week after Canva confirmed on Friday that $2.4 billion (US$1.6 billion) worth of shares in the design software platform had changed hands in a secondary market sale, at a valuation of $39 billion (US$26 billion).
The total value of shares sold – around six per cent of the business – is US$600 million more than first flagged at the start of this year.
Cofounder and COO Cliff Obrecht, who oversaw the sale, said “people should have their money” now it has been finalised.
And yes there will be venture capitalists, their investors and other early-stage backers feeling pleased with themselves, but the more profound aspect is the effect on people who believed in a vision and signed up as “Canvanauts”, receiving shares under Canva’s ESOP (Employee Stock Ownership Plan).
To the absolute credit of cofounders Cliff Obrecht, Cameron Adams and Melanie Perkins, they made their team part of the business by sharing a stake in Canva. It’s been part of the company’s secret sauce, creating a bond that some have described as a cult. Perhaps, but a benign and highly lucrative one for all those who share the faith and have now been rewarded, a decade on, with this deal.
This matters on several fronts.
It won’t always be the case, but the success of Canva does say that an ESOP is real in a profound way – a powerful signal to other founders prepared to share in attracting talent.
It’s also been an effort in democratisation while building an Australian business unlike anything we’ve seen before.
When Atlassian floated on the Nasdaq in December 2015 – the biggest IPO by an Australian company in the US – the money flowed primary to two big dogs, the billionaire cofounders, who continued to generate income from offloading shares to this day.
A new benchmark for Australian business
This is a sharing of success and wealth unlike anything we’ve seen since NRMA and AMP were demutualised two decades ago and members were given shares ahead of their public listings.
It’s not happened at Fortescue, Hancock Prospecting, Visy, Meriton, Westfield, or many of the other Australian companies where billionaires say nice words about the people who deliver value to their businesses while banking the cash.
And it has the potential to change the employment landscape for millennials and beyond if they’re prepared to take on entrepreneurial risk alongside their pay.
Yes, there have been layoffs in tech, but traditional businesses do the same thing. The difference is no one leaves an Australian bank after several years – except the CEO – with a wad of company shares alongside their redundancy pay.
Who would you rather work for?
No doubt it’s business as usual for Obrecht and his cofounder wife, Melanie Perkins, recently named Australia’s 10th richest people. In 2021, the pair pledged to give their fortune away.
The share sale is a transformative moment in the lives of many Canvanauts, who won’t necessarily be people gagging to become angel investors and pour that money back into the startup ecosystem as newly minted sophisticated investors.
Most likely they just paid down a hefty chuck of their mortgage or school fees and can breath a little easier – or perhaps they now have enough for a home deposit.
Maybe some will use the cash as a springboard for their own business.
Canva raised more than $770 million across 14 rounds of funding. The existing valuation of $39 billion was set in August 2022 when three of its key Australian investors, Blackbird, Square Peg Capital and Airtree, all agreed to cut their valuation by 36 per cent from US$40 billion following a US$200 million raise in 2021.
Meanwhile, Sydney private equity firm Quadrant, is reportedly looking to buy $100 million worth of shares from Blackbird, which sold a $150 million stake last year – 3 per cent of its total holding – at the same valuation to New York’s Coatue Management and San Francisco’s ICONIQ Capital.
Last month Fast Company announced Canva at No. 2, just behind Microsoft on its list of the most innovative companies in enterprise for 2024 with a focus on the rise of AI. Canva was recognised for making its easy-to-use visual design and communication tool even easier with AI.
This article originally appeared on Startup Daily. Read the original here.