Design software startup Canva has been making news of late. The company just raised $200 million at a $40 billion valuation, and co-founders Melanie Perkins and Cliff Obrecht gave the vast majority of their equity (around $13 billion) to charity through the Canva Foundation.
We sat down with Perkins at TechCrunch Disrupt 2021 to talk about how she has approached fundraising, what she’s looking for in a potential acquisition, how she’s managed to grow Canva’s free and paid user base at a rapid clip, and what it actually means to be a “mission-driven company.”
The conversation kicked off with Perkins charitable donation. She clarified that her and Obrecht’s $13 billion-ish give-back was the vast majority of their equity in the company, around 30%. This is a relatively big chunk of equity for growth-stage founders who have raised so many rounds, but Perkins explained how the company has tackled fundraising with a focus on preserving equity.
With early-stage startups, it was very common that you had to raise a 20% to 25% round. We’ve had a very different approach. We’ve raised in the early stages. We couldn’t really be that selective about investors. But investors were very selective about who actually believed in our vision. So it worked out well. But in the time since, we’ve done many rounds. Now, we do a much smaller round at the next value inflection point.
We know, or we hope, that Canva is going to continue to grow rapidly in the right direction. So the valuation today is obviously going to be much smaller than the valuation over the years to come. Rather than taking like a 15% to 25% hit in one single round, which means that you can only do a few rounds over the course of a company’s lifetime, we’ve done much smaller incremental rounds. This has meant that, because we knew that we were wanting to build a big company, we didn’t overcapitalize or overdilute in the early stages. And so we’ve done many, many rounds, that are much smaller amounts, comparative to the size of the round.
Perkins also gave us insight into how Canva plans on spending that fresh $200 million. With the company on track to record $1 billion in annualized revenue, there wasn’t a lot of urgency around raising capital in the first place. But as a company with huge goals, she felt it was necessary to always ensure that, should the lights go out, the company could keep working toward its goal and grow.
With the funding, Canva plans on doubling its workforce, which currently sits at 2,000 employees. The company is also feeling a bit acquisitive. The startup has made five acquisitions so far, but Perkins explained that there are currently a few startups she has her eye on.
She wouldn’t share which companies she’s looking at, but she did give us some insight into what she’s looking for. “I feel like there are a few different types of companies in the world: People that really focus on bringing delight, and then other people who are more about hierarchy and structure and those sorts of things,” she said. “People who are purely focused on delivering value is really important.”
She also explained that being mission-aligned is critical for Canva. As a company with huge goals — to empower anyone in the world to design, and as a result of that, to become one of the most valuable companies in the world — anyone who helps Canva “leapfrog” toward those goals is particularly interesting as an acquisition target.
Growth is key when it comes to achieving any of those goals, and Canva has been quite successful at scaling. The company started out with a free product, and over time, added a Pro product ($9.99/year in the U.S.), followed by a Pro Teams layer and an enterprise product.
There are currently more than 500,000 teams paying for Canva, so it goes without saying, then, that Canva has mastered the B2C to B2B transition.
Perkins explained how Canva pulled off such staggering growth.
[Our Pro product] is priced at an affordable price. That means that people aren’t having to make a really big decision about the price point. So it just becomes a no-brainer. Then, we think about how we can provide so much value that people love it so much that they tell their team and their family and friends, and they get everyone on board. Obviously with that free product, it’s not a price point decision. We jam pack as much value in [as we can] and we don’t give you limits on the number of designs that you can have or anything like that. So it really creates that virality within the free product.
Perkins said one ingredient, beyond the math of pricing and packaging, is unifying the team around a mission. Startups everywhere like to call themselves “mission-driven,” but Perkins explained exactly what she means by that.
It means getting a really, really clear picture of the future that you want to create and then working damn hard to get there,” said Perkins. “In the early days, people were very focused on having an A/B test for everything. And the reality is, you can’t necessarily A/B test your way to a really great vision and to what is really important. The way we unify the entire company is that we get really clear about the picture of the future we want to work toward. And then we work really hard to bring that to life.
She gave an example of how this methodology plays out in the real world: Each quarter, Canva has a companywide event where hundreds of employees share their five-year vision for their own department, feature or product within the company.
The goal is to see what people are dreaming about. From there, the team works toward unifying that vision and deciding where they’re headed. Then, they break down those goals into much smaller, more achievable goals and head off on their paths.
