US tech squeeze hits as investor cuts value of its shares by 33 per cent

However, Franklin’s marking of its Canva shares to lower public market multiples means that any Canva raising in the near future could be a “down round” – one struck at a lower valuation than the most recent – ​​which is a proven destroyer of confidence among investors , staff and even customers.

Franklin’s Growth Opportunities Fund is, at this stage, the only Canva investor known to have significantly written down its valuation.

Major backers T. Rowe Price and Capital Group also had to report the cost and value of the individual holdings in all their funds during March, and held Canva shares either at cost or negligibly down.

Franklin Templeton’s own Growth Fund kept Canva steady too, shaving just $US16,000 off the value of the $US43.3 million it paid for 25,413 Canva shares in September. The manager was approached for comment.

Aussie investors keep the faith

Canva’s local venture capital backers are also keeping the faith.

AirTree Ventures partner Craig Blair said Canva’s fundamentals supported the manager’s holding value, and that it would not be marking it down.

“We are regularly approached by firms who want to buy our stock at, and in some cases above, the last round valuation,” he said.

Canva’s spokesman said the company could not speak to the actions of single investors – it has hundreds – but remained confident in its trajectory.

He said Canva had generated positive free cash flow for the past five years, had more than $US1 billion in annualized revenues and 85 million monthly active users, up from 60 million at its last raising.

The sell-off of technology on public markets had in one way been a benefit to Canva, he added, as the volatility had sent a record 260,000 job applications its way in the past year.

Franklin Templeton’s decision to mark down Canva shares would have been impacted by public market valuations as opposed to any factors specific to Canva, according to Square Peg Capital partner Paul Bassat.

“Canva is an extraordinary company, and it has the potential to continue growing for many years to come and evolve into one of the most important technology companies globally,” he said.

In any case, Mr Bassat said revaluations of Square Peg’s Canva shares, which it has held for nearly a decade, were only made when it raised capital at a new valuation.

Rick Baker, a partner at one of Canva’s earliest backers in Blackbird Ventures, said he remained comfortable with Canva’s valuation multiples relative to comparable listed companies in the US.

“Although the multiples of mid-2021 seem high now, since its last funding round Canva has grown by about the same percentage as the listed market multiples have declined,” he said.

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