Australian tech investors are betting big on the giant startup Canva. Now, they are about to test

Square Peg said it will update its valuations in the next quarter, starting on June 30, with the valuation of companies deemed “material” by an independent appraiser. AirTree will update its ratings in its regular quarterly cycle, also on June 30.

Each fund emphasized that even without Canva, its performance is solid compared to competitors in Australia and abroad. It is typical in venture capital that one or a few large bets carry many other investment decisions, given the expected high failure rates among startups. At a lower valuation, Canva would still be a great choice for the money you invested in, especially Blackbird, who got into Canva early on and supported it over and over again over the course of many years. Even with prices dropping sharply, Blackbird’s investment in Canva is poised to deliver a massive return to its investors.

However, despite Canva’s importance to the Australian tech sector alone, it is also a sign of the extent to which the sector has fallen from its recent highs.

Craig Blair, co-founder of AirTree, admitted in an interview that the price paid for startup investments had gone up over the past year, but he doubted that AirTree had done too many deals at too high prices.

“I think it’s correct to say that any investor who has invested in growth stage companies in the past 12 months … has certainly driven valuations that we haven’t seen before, and we may never see again,” Blair said.

He said AirTree was disciplined in its investments, took into account valuations going back to long-term averages, and paid the right price to reflect the markets at the time the deals were done. ‘” said Paul Passat, who co-founded job site Seek in 1997 and then Square Peg in 2012 Sydney Morning Herald And the the age He was largely confident in decisions made when the market was sweltering, pointing to stakes in companies that had good internal economies and money reserves, but which times to give up would be tougher.

“In the current environment, we are likely to expect over the next six or twelve months some write-downs, and we will see more failures in our venture capital portfolios for the next year or two than we have seen in the past year or two,” Al-Bassat said. That on June 30, there will be significant write-offs.”

In an email response to questions, Blackbird co-founder Nikki Shivak predicted an optimistic outlook.

“While complications have contracted, we don’t see anything to suggest that the quality of companies being formed in Australia and New Zealand has diminished,” Scevak said.

A Canva spokesperson noted the company’s positive metrics and noted a discrepancy in ratings, including some investors who didn’t change their ratings and others downgrading theirs by 10 or 20 percent. “Evaluations with institutional investors are strongly influenced by general ‘peer comparisons’ which are primarily turbulent due to the broader macroeconomic environment,” the spokesperson said.

Blair stressed that venture capital funds are ultimately judged on the basis of the liquidity they return to investors.

But the drop in ratings will continue to reverberate across the sector. It will hurt startups trying to raise funds by forcing them to hand over more shares in exchange for the cash they need to survive — or face a meltdown. Others will have to spend less money, hire fewer people, and reduce marketing because they are trying to make current money for as long as possible and to show investors that they have a way to make a profit. Startups rising at lower valuations also face the prospect of weak morale for employees, who had been expecting their shares to continue to appreciate.

loading

Square Peg, Blackbird and AirTree have said they will not start introducing harsh, non-standard clauses into deals to protect their investments, despite the economic downturn, while stressing they have money to spread and are seeking good companies. It is likely that some of the most powerful startups will benefit from the waning war for talent if the sector cools down.

Venture capital funds, on the other hand, will be hurt indirectly because investors, like the nation’s pension funds, will almost never see a rosy picture when thinking about turning the money into their next cash. In a batch dated 2021, Square Peg is seeking $550 million across its fifth generation of funds, targeting an initial close in February of this year and a final close in the second quarter.

“We are not lifting and will not raise until the end of next year,” said AirTree’s Blair. Square Peg’s Basat said the latest round of funds was “basically done”, although it hasn’t closed.

In 2022 the Blackbird Boxes platform he saw Sydney Morning Herald And the the ageIt is asking for $1 billion, divided into two Australian funds and one New Zealand fund.

Asked if the funds had closed, Shivak said: “We are currently collecting our fund and it is doing well so far.”

Blackbird advertises its money under the banner of investing in “the wild hearts with the wildest ideas” — high-definition language at a time when messianic founders like Adam Newman of WeWork are being vilified in popular culture, but Scevak insists the phrase stands.

“Furthermore!” He replied when asked if it was appropriate for the era. “As markets and economic conditions get tougher, those companies that offer only additional benefits suffer, and those with big ambitions looking to make real change and solve the biggest problems succeed.”

The Business Briefing newsletter offers top stories, exclusive coverage, and expert opinions. Sign up for it every morning of the week.