Money How to make sense of Canva's $1 billion valuation

02:21  14 january  2018
02:21  14 january  2018 Source:   Sydney Morning Herald

Uber ex-CEO Kalanick selling nearly a third of stake for $1.4 billion: source

  Uber ex-CEO Kalanick selling nearly a third of stake for $1.4 billion: source Kalanick's sale is part of a deal struck by a consortium led by SoftBank Group Corp which is taking a 17.5 percent stake in Uber, mostly by buying shares from early investors and employees. SoftBank last week secured agreements from shareholders who were willing to sell, and the deal will close early this year, Uber said.The SoftBank deal values Uber at $48 billion, about a 30 percent discount from its most recent valuation of $68 billion. However, the investor consortium is also making a $1.25 billion investment of fresh funding at the older, higher valuation.

Canva , a white-hot, Surry Hills-based design software start-up became the world's latest "unicorn" this week - a private company valued at more $US 1 billion . Originally published on smh.com.au as ' How to make sense of Canva ' s $ 1 billion valuation '.

Both in the ancient literature sense - and in the billion-dollar start-up sense . Canva , a white-hot, Surry Hills-based design software start-up became the world' s latest "unicorn" this week - a private company valued at more They were sold, or had to raise money, at valuations below the $US 1 billion mark.

Unicorns are mythical creatures. Both in the ancient literature sense - and in the billion-dollar start-up sense.

Canva, a white-hot, Surry Hills-based design software start-up became the world's latest "unicorn" this week - a private company valued at more $US1 billion.

It marks a significant milestone for the fast-growing company, and is another sign of the momentum in Australia's maturing tech industry.

Still, there are reasons not to get too carried away by the news.

For one thing, "unicorns" used to be rare, hence the moniker. That is no longer really the case.

According to CB Insights, a start-up research firm, there are now 224 of them around the world (some of the better-known ones include Uber, Airbnb and Spotify).

Harry and Meghan's wedding jackpot

  Harry and Meghan's wedding jackpot Their big day to bring in $1 billion!The wedding looks set to bring in a hefty $1 billion to the UK economy, according to experts.

Both in the ancient literature sense - and in the billion-dollar start-up sense . Canva , a white-hot, Surry Hills-based design software start-up became the world' s latest "unicorn" this week - a private company valued at more They were sold, or had to raise money, at valuations below the $US 1 billion mark.

blog 'lyndagramlich.blogdetik.com' is not exists. Christianity Made Simple

Canva, co-founders (l-r) Cameron Adams, Melanie Perkins and Cliff Obrecht. The company could have raised funds at a higher valuation, Obrecht says.© Provided by Sydney Morning Herald Canva, co-founders (l-r) Cameron Adams, Melanie Perkins and Cliff Obrecht. The company could have raised funds at a higher valuation, Obrecht says. Canva is the only Australian firm currently on the list - and the first to make it on there since Atlassian. It could have been valued even higher.

6 big things I’m watching out for in 2018

  6 big things I’m watching out for in 2018 Here’s 6 things I expect will have an impact on the market in 2018.-Continued pressure on the franchise business model

If you’ve wondered how these numbers would look written out in full with loads of zeros, you can make use of one of my favourite maths “helpers”, the place value table: With these two particular numbers, I know that the “1” corresponds to “ 1 billion ” and “1 million” respectively.

blog 'kellysuire.blogdetik.com' is not exists. Acts of Trust: Making Sense of Risk

“We could have raised at a higher valuation from other investors, but that’s not something we wanted to do,” co-founder Cliff Obrecht told me this week.

Yet is also important to note that start-up valuations should really be taken with a grain of salt.

Don't just take my word for that.

"All these private valuations are fake ... It's all on paper, it's all a myth", Bill Gurley, a widely respected US venture capitalist, and an early backer of Facebook and Uber, famously said in 2015.

Start-up valuations have also been described by Bloomberg as "fuzzy", "insane" and "kind of made up".

It is difficult to succinctly explain why, but here is an attempt.

Venture capital firms that back start-ups typically demand provisions to limit their downside risk.

After all, investing in start-ups is risky. Most of them (anywhere from 60 to 90 per cent, depending upon who you listen to) end up failing.

Common protections VCs get when investing in start-ups include "liquidation preferences" that, in the event of a sale or float or wind-up, ensure they get paid back before anyone else; and "ratchets" that entitle them to more shares if a certain return threshold isn't achieved.

Cryptocurrency Ripple continues steep rise in 2018

  Cryptocurrency Ripple continues steep rise in 2018 XRP has added almost 45 percent more value since the calendar ticked over into 2018. Ripple – which officially trades the currency XRP – is described by its San Francisco-based start-up as "a frictionless experience to send money globally using the power of the blockchain".At midnight on December 31, XRP was trading at $US2.29. At the time of publishing on January 4, XRP added 44.9 percent more value at $US3.32.In mid-December XRP was trading at US 25 cents each.

The following essay is reprinted with permission from The Conversation, an online publication covering the latest research. National discussions of crucial importance to ordinary citizens—such as funding for scientific and medical research

blog 'erinpennington.blogdetik.com' is not exists. Satellite Remote Sensing : A New Tool for Archaeology: 16 (Remote Sensing

Canva says it is the newest Australian unicorn — a private company valued at over US$1 billion.© Twitter/ @irontomlinsons Canva says it is the newest Australian unicorn — a private company valued at over US$1 billion. So, while the sale of a small percentage of a company at a certain price may imply a big valuation, the reality is much more complicated.

In any case, "unicorn" status is coveted by start-ups for a few reasons.

It's a powerful tool for recruitment - the battle for talent in the tech industry is fierce. It's also a good, easy news story to tell.

Canva's raising was picked up by various outlets, here and abroad, some of which don't normally cover the field. Hey, it's three days after the fact, and I'm still writing about it here.

The upshot is that many people (potential users) who hadn't heard of the service before, will have now. Well played.

Achieving a high valuation from investors, though, is not without risks.

It exposes a private company to the possibility of a dreaded "down round" in future.

"That's definitely a risk," Blackbird Ventures partner Rick Baker, one of Canva's earliest backers, told me this week. "But it's one we were obviously willing to take."

Where does the future lie for cricket broadcasting in Australia?

  Where does the future lie for cricket broadcasting in Australia? Rupert Murdoch and Frank Lowy reacted wisely to seeing the Four Horsemen of the Apocalypse charging towards their empires. Major spectator sports have opened the stable door.The original horsemen, as written in Revelations in the New Testament, were Conquest, War, Famine and Death.

blog 'gregbradley.blogdetik.com' is not exists. Boxed Set 1 How To Make Natural Skin Care Products

blog 'laurafrizzell.blogdetik.com' is not exists. Dante and the Sense of Transgression: The Trespass of the Sign

Seven "unicorns" suffered this fate last year - you could say they had their horns ripped off. They were sold, or had to raise money, at valuations below the $US1 billion mark.

At least one, Jawbone, a maker of wireless speakers and fitness trackers, went out of business.

For Canva, the prospect of this would seem remote.

Sure, the company is yet to turn an annual profit. In the most recent financial year, it lost $3 million, and it generated just $24 million in revenue.

But a start-up losing money in the early years of its existence is not unusual.

And Canva claims it turned cashflow positive last year, and has been so for four straight months.

Its revenue is said to be growing at triple-digit rates, and it's mostly recurring, something investors salivate over.

Its cost of acquiring customers is said to be extremely low (it doesn't spend much on marketing, and has grown through word of mouth), as are its churn rates (the percentage of subscribers quitting).

I could dive further into the weeds of the metrics used to value software companies here, but the reality is this: some very smart people are deeply psyched about the company's potential.

They could be wrong. If the company continues on its current trajectory, they will be right.

Regardless, Canva is certainly not the most ridiculous-looking investment out there.

Cryptocurrencies, or even closer to home, smaller tech stocks on the ASX, look much, much more questionable. And retail investors are punting on them.

Which brings us to arguably the most important point.

Start-ups like Canva are almost completely backed by sophisticated, professional institutional investors (themselves backed by gigantic entities such as super funds, which allocate only a small portion of their money to the sector).

If they make a failed bet (and they do), these investors have the financial strength to withstand any losses. And if they're right, they will also reap the rewards.

End of a chip boom? Memory chip price drop spooks investors .
<p>After a blistering year-and-a-half long surge, a sudden drop in some memory prices, followed by Samsung Electronics Co's disappointing profit estimate, is causing jitters among investors who had bet the chip boom would last at least another year.</p>Amid news that the market has started losing some steam - prices of high-end flash memory chips, which are widely used in smartphones, dropped nearly 5 percent in the fourth quarter - some analysts now expect the industry's growth rate will fall by more than half this year to 30 percent.

—   Share news in the SOC. Networks

Topical videos:

This is interesting!