Why We Invested: Canva in 2018

Investment Summary

Overview

In 2018, YXS Capital invested in Canva's Series C at a $1 billion valuation. Based on Canva's reference valuation of approximately $42 billion, that position represents a 42x multiple on invested capital.

At the time, Canva was widely categorized as a design software company. Our thesis was that it was building something broader: a visual communication platform for the large majority of people who create visual content but aren't designers. That distinction shaped how we sized the opportunity, how we evaluated the founders, and why we were comfortable investing at a $1 billion valuation.

This case study covers why we invested in Canva and how the reasoning behind that decision continues to shape how we evaluate companies today.

Market Context

By the mid-2010s, design software was widely viewed as a mature category. Professional tools were powerful but complex, and simpler tools were generally treated as non-essential. The prevailing assumption was that further innovation would be incremental and aimed at professional users.

Canva approached the market differently. Rather than competing for share within professional design software, it focused on people who need to produce visual content but aren't designers: marketers, educators, small business owners, students, and teams across every business function. Measured that way, the relevant market was not design software. It was visual communication, and it was significantly larger than the professional segment Canva was most often compared to.

Canva was also being built in Australia, outside the major U.S. venture hubs. In our experience, investors who source mostly within those hubs are more likely to underestimate companies built outside them.

Founder Assessment

We first identified Canva in mid-2015, early in its institutional fundraising. At that stage, our interest was driven more by the founders and the category insight than by metrics.

Melanie Perkins had been working on the same core idea for years, first through a yearbook design business in Perth and then through Canva. She has spoken publicly about being turned down by more than 100 investors during Canva's early fundraising. What we noted was the consistency of her vision over that period. It didn't shift to match investor feedback or market trends, and it was supported by more evidence each time it was presented.

Canva's founders were also deliberate about who joined their cap table, prioritizing long-term alignment over the amount of capital available. We viewed that discipline as consistent with how they were building the company.

Building Conviction Over Time

From 2015 through the Series C, we followed Canva closely and stayed in regular contact with founders, operators, and teams in our network who were using the product.

The early product signals were strong. Onboarding was fast, the workflows were intuitive, and non-designers got value from it immediately. Adoption was spreading organically across startups, educators, and small teams. We were also using Canva internally as a team and decided to implement it inside our portfolio companies, to confirm both the easy onboarding process and, more importantly, the quick results from usage. We understood then that we had found the same magic we felt when we found and invested in TransferWise in 2015 (now Wise), where we ended up with a 16x return.

The most useful signal, though, was how users described the product. Over time, people stopped referring to Canva as a design tool and began describing it as something they used routinely to get work done. We treat that kind of shift, from a tool that serves a specific task to something embedded in daily workflows, as a meaningful indicator of durable category leadership.

The Investment Decision

Our allocation in the Series C came through an existing investor relationship with visibility into the round. Despite the difficulty accessing the allocation, we worked our way into the Series C. Because we had followed the company for roughly three years, we were able to move quickly once the opportunity was available.

A $1 billion entry valuation is not typical for a venture outcome of this size. Our underwriting rested on three views:

• Canva's addressable market was substantially larger than its valuation implied.
• Its growth came from organic, product-led adoption rather than heavy spending.
• Its founders would keep making disciplined decisions about capital and ownership as the company scaled.

The Outcome

Against Canva's reference valuation of approximately $42 billion, our position represents a 42x multiple on invested capital.

Canva's growth after the Series C exceeded our underwriting case. The platform expanded across education, small business, and enterprise, and across international markets. Product-led growth, brand recognition, and network effects reinforced each other.

By the end of 2025, Canva reported more than 265 million monthly active users, more than 31 million paid users, and $4 billion in annual recurring revenue. The company has reported profitability every year since around the time of our investment, a strong indication that its growth was driven by product adoption rather than spending.

The company has also expanded well beyond graphic design. It now covers presentations, documents, websites, video, and AI tools that let users generate designs and interactive content from plain-language prompts. In 2024, it acquired the professional design suite Affinity and the generative AI company Leonardo.ai.

YXS Capital Investment Decision Framework

Canva was the fifth investment in our first fund. The reasoning behind it still guides how we evaluate companies.

1. Category expansion. We size markets by the problem being solved, not by the category a company is grouped into. One of the first questions we ask is who isn't using products in a category today, and why. Companies that bring in an entirely new user base often look smaller than they are when measured against existing competitors.

2. Founder evaluation over time. We evaluate founders over years, not meetings. We pay close attention to whether a founder's vision stays consistent as evidence accumulates, and to how founders make decisions about capital, ownership, and alignment.

3. Customer behavior over customer claims. We give more weight to how customers use a product than to how they describe it. Organic adoption and depth of workflow integration tell us more about durability than headline growth figures. When a product becomes part of how people routinely work, it's much harder to displace.

4. Capital efficiency as a quality signal. We look closely at whether growth is being earned through product adoption or bought through spending. Companies that grow efficiently keep more control over their own timelines, their dilution, and their path to liquidity.

5. Entry valuation relative to reachable market. A later-stage entry can still offer significant upside when the market is pricing a company against too narrow a category. We underwrite to the opportunity we believe is achievable, not the one implied by current comparisons.

6. Sourcing beyond consensus markets. We source across the U.S., Europe, and other international markets because strong companies are often built outside the hubs where most venture capital is concentrated.

7. Long-term relationships. We stay engaged with companies we believe in, often for years before investing, so that we can act quickly and with conviction when the right opportunity arises.

We apply the same framework to every company we evaluate today, to serve our investors and the founders we back: identify opportunities early, build conviction over time, and act decisively when the evidence supports it.

Important Disclosures. This article is provided by YXS Capital for informational purposes only. It references publicly available information, including company announcements and press coverage from sources including Bloomberg and Reuters. YXS Capital has not independently verified third-party information and makes no representation or warranty as to its accuracy or completeness. The 42x figure represents a gross multiple calculated by reference to Canva's reference valuation relative to the entry valuation of YXS Capital's investment. It is unrealized, is not based on a liquidity event, and does not reflect dilution from subsequent financings or any fees or expenses, if any, which would reduce returns. Canva is a private company, and its valuation is subject to change and may never be realized. This investment was selected for illustrative purposes, does not represent all investments made by YXS Capital, and should not be construed as an indication that any investment has been or will be profitable. Nothing herein constitutes an offer to sell, or a solicitation of an offer to buy, any security or investment product, or constitutes investment, legal, tax, or accounting advice. Any offer or solicitation with respect to any YXS Capital fund will be made only pursuant to definitive offering documents. Past performance is not indicative of future results. Investments in venture capital involve substantial risk, including the possible loss of the entire amount invested. Views expressed are those of YXS Capital as of the date of publication and are subject to change without notice.