Canva Backers Cut Valuation by $7.1 Billion Amid Rising AI Compute Expenses

Early venture backers of design software company Canva have reduced their internal valuation mark for the Australian tech startup by $7.1 billion, reflecting severe margin pressures tied to running high-cost artificial intelligence models. The markdown was originally reported by the Australian Financial Review and further detailed by technology outlet The Next Web. Canva's long-time investors Blackbird Ventures and AirTree Ventures lowered their valuation of the business from $42 billion to $34.9 billion, representing a 17% cut.

The write-down appears across two distinct financial metrics. While Blackbird and AirTree reduced their valuation to $34.9 billion, Canva's independent internal valuation—which establishes the price at which employees can execute internal share sales—experienced a steeper decline. Over the past year, Canva's internal valuation fell from $38.9 billion to $31 billion, amounting to a $7.9 billion downgrade. Neither adjustment represents a secondary stock transaction, but both point to growing caution among valuation committees over the economics of AI-driven software.

The adjusted figures follow revisions to Canva’s sales trajectory. On August 3, the Australian Financial Review reported that Canva reduced its expected annual revenue growth target by one-third, down to 20%. The company posted second-quarter revenue of $921.9 million, up 25.2% year-over-year, but missed its internal guidance. Executives attributed the lower growth projections to unexpected expenses associated with deploying frontier AI models to millions of users.

Addressing the operational challenge, Canva chief executive Melanie Perkins noted in an email to Fortune that user appetite for new AI functionality "significantly exceeded" initial company expectations, forcing management to adjust its rollout cadence. Perkins said the initial launch "validated the demand, but also showed us we needed to reduce the cost of completing an AI task to support a broad rollout." She added that "rather than broadly rolling out a product before the underlying economics were ready, we decided to slow the rollout while we rebuilt the architecture, reduced unit costs and strengthened the business model." Canva reported that unit costs per task dropped by nearly 90% following the April release of Canva AI 2.0, though overall savings were moderated as users created three times as many designs.

The margin compression highlights broader structural shifts across the software industry. PitchBook senior research analyst Derek Hernandez told Fortune that generative AI alters the traditional margins of the software-as-a-service model. "AI is making SaaS no longer a zero marginal cost solution, which has really been what I would call a lot of software’s secret sauce up until now," Hernandez said. He compared training foundational AI models to manufacturing a Ford F-150 truck, while describing ongoing inference costs—the expense incurred each time a user generates content—as the fuel and maintenance required to run the product.

Similar compute costs have begun impacting public technology equities and enterprise buyers. Hernandez pointed to design competitor Figma, which expanded 48% but saw its equity fall 16% as free cash flow margins contracted from 27% in the first quarter to 14% in the second quarter. Across the broader enterprise market, an internal Amazon initiative using Anthropic’s Claude model ran 860% over budget before being scrapped, while Microsoft established internal AI usage limits and EY deployed an AI router to redirect basic queries to lower-cost models. Scale Venture Partners partner Rory O’Driscoll noted on the 20VC podcast that "there’s going to be a lot of people paying the bill in 26 and 27 for a certain amount of hesitancy in 23 and 24."

The infrastructure adjustments come as Canva expands into corporate workflows with products like Canva Code, while competing against lean European entrants such as Lovable, which reached $500 million in revenue with 146 employees. With Canva previously targeting an initial public offering in 2026—and some market observers suggesting 2025—Hernandez noted that managing unit costs remains essential ahead of a potential public listing. "I’m sure they’re trying to protect their profitability, especially if they want to go to public investors," Hernandez said, noting that public markets favor disciplined margin management over unconstrained top-line growth.