Should Box Acquire Canva?

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According to a recent report, the global computer graphics design software market is estimated to grow at 6.5% annually to reach $280.15 billion by 2025. While the industry has big names like Adobe Illustrator and Adobe Photoshop as the leading players, startups like Billion Dollar Unicorn Canva are also making their presence felt.

Canva’s Offerings

The idea behind Sydney-based Canva came to co-founder Melanie Perkins back in 2007. At the University of Western Australia, Melanie was teaching students how to use programs such as InDesign and Photoshop. She realized that these programs were not only difficult to learn but also difficult to use. She soon came up with an idea of wanting to build an online tool that could help create school yearbooks. She partnered with her co-founder Cliff Obrecht, and together, the two took out a loan to launch their first entrepreneurial venture, Fusion Books.

Fusion Books taught both of them the core principles of running a business. But the two still wanted to solve the issue of a complicated graphic design software. In 2012, the duo paired up with Cameron Adams, a Google alumnus, who shared their vision and culture and helped them set up Canva.

Today, Canva offers individuals and organizations the capability to design and publish anything from simple posters to media graphics and presentation tools with a simple drag and drop technology. The application comes with a stock of pictures and templates that make the designing process simple and intuitive for its users.

In April last year, Canva announced the acquisition of another Australian startup called Zeetings for an undisclosed sum. Founded in 2014, Zeetings is a presentation platform that allows users to combine PowerPoints and PDFs with other media files including video, web content, images, and polls to deliver an interactive presentation. Zeetings’s financials are not known, but the company had raised $2 million in seed capital from various angel investors. The acquisition is expected to help Canva make bigger inroads into the enterprise and the presentation driven market. Keeping with its enterprise focus, last year, Canva announced its plans to launch integrations with Dropbox allowing users to collaborate and access files and media on both the platforms.

Canva’s Financials

Canva operates on a freemium model. The basic service is available to users for free and comes with limited features such as the ability to connect with 10 members, access to more than 8,000 templates and the ability to upload own images. The premium paid subscription called Canva for Work is priced at $9.95 per user per month and provides access to unlimited folders and uploads, ability to connect with 30 team members and premium tools such as resizing, additional fonts, and custom color templates,. The company also offers an enterprise level service.

Canva is estimated to have attracted more than 10 million users globally. The application is currently being used in 190 countries in 100 languages. Canva claims that it is being used by nearly 80% of Fortune 500 companies. In December 2018, Canva had helped create more than a billion designs on its platform. Canva does not disclose the breakout of its financials, but for the six months ending December 2017, it had generated $25.1 million in revenues and a $1.86 million in net profit. In times when most startups are struggling to report profits, Canva’s profitability is a welcome break. Analysts believe that Canva’s revenues are primarily driven by the enterprise offering. The financials have improved significantly compared with the $23.5 million in revenues it reported for its fiscal year ended June 2017. Canva had also ended fiscal 2017 with a net loss of $3.3 million.

Canva has raised $83 million in funding so far through 8 funding rounds. Its investors include Felicis Ventures, Sequoia Capital, Blackbird Ventures (Australia), and Matrix Partners. Its last round of funding was held in January last year, when it raised $40 million at a billion dollar valuation. Canva has not yet revealed plans of an IPO but is working toward becoming IPO ready.

Canva is now looking at international expansion. It has already established operations in Manila. Last year, it began establishing its presence in China. Canva believes that it has a long way to go.

Some believe that the company is set to replicate the success of the likes of Adobe Design or Microsoft Office. Canva claims that it has received acquisition offers, but has not considered them yet. What do you think lies in the future for Canva? Do you think it will continue to grow at its rapid pace independently, or will someone like Box look to acquire it? Box is a known leader in cloud based collaboration platform and adding Canva’s graphic design capabilities will help it make more inroads into the design and marketing teams of organizations. Box needs workflow specific apps, in my opinion, and Canva is a great option.

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Photo credit: Michael Koukoullis/Flickr.com.