What’s going on here?

Design platform Canva is sketching up an initial public offering (IPO), aiming to steal some attention from creative software rival Adobe.

What does this mean?

Canva’s nursing a humble $26 billion valuation these days – a hefty downgrade from the $40 billion it boasted in 2021. But if the Australian company pulls off a successful IPO, the resulting cash could fund shiny new products and more purchases of other firms – bets that could restore its former glory. And if Canva lists in the States, as hinted, that would set the scene for a face-off with American rival Adobe. The $230 billion behemoth boasts a 70% share of the creative software market, putting Canva’s 4% to shame.

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Why should I care?

For markets: A freemium listing.

Canva’s free tools have won over an impressive 190 million monthly users, double its count from 2022. And the company’s sales picked up by 50% last year, too – although most of Canva’s cash still comes from individual subscriptions, rather than more lucrative deals with businesses. So to score a bigger chunk of the market, Canva’s betting big on AI. The company snagged generative AI startup Leonardo.ai in July – mere months after picking up Affinity, a rival to Adobe’s Photoshop and Illustrator software.

The bigger picture: It’s safer stateside.

The US market is the go-to spot for international company listings. In Europe, the Middle East, and Africa, IPO proceeds were down 39% last year, while the Americas saw an uptick of 155% with around 132 deals on US exchanges. You can see why they call it the land of opportunity. A US listing comes with benefits that some foreign markets just can’t offer – not least a bigger, richer pool of potential shareholders who can help firms fetch higher valuations than they’d get elsewhere.

Source: EY