Airtree has followed in the footsteps of major VCs Square Peg Capital and Blackbird Ventures, cutting the valuation of its stake in tech giant Canva by 36%.
The decision drags down the value of its early funds by Sydney investor by 18%.
Blackbird and Square Peg had already reduced the value of their stake in Canva by 36% in their letters to investors, bringing the global design giant to a value of $25.6 billion ($37 billion), down from $14.4 billion. on the $40 billion (A$54.5 billion) valuation at the last raise in September.
While Square Peg published his investor letter from Paul BassatSaid it “reflects our view of what’s happening in the markets right now and how we’re responding,” Airtree said it wouldn’t share its letter externally with limited partners when Startup Daily asked.
But a leaked copy revealed that Airtree told its Limited Partner that its valuation policies “has always been conservative” and that they only increase “when a credible, outside investor leads a round”.
“There have been several instances of companies in our portfolio that have raised high valuation rounds, and we have held them at cost or a prior round. We also quickly write off a company for operational performance,” the letter said.
Eight years after launching the first fund, Airtree called on big 4 consultancy EY to lead its ruler over some key valuations this time around.
Airtree has supported 73 businesses since 2014, including Milkrun, the last remaining local grocery delivery service, decade-old small business lender Prospa, restaurant ordering platform Mr Yum, Pet Circle, Linktree, Go1, and Employment Hero.
Last month, Sweden’s BNPL Klarna saw its valuation fall by 85% in just 12 months – from a valuation of $45.6 billion in June 2021 when it raised $639 million. The world’s second most valuable fintech raised $800 million in July in a round that valued the company at $6.7 billion ($9.74 billion).
The Franklin Templeton Growth Opportunities Fund was the first to call on Canva in March, reducing the value of its stake by 33.5% from US$20.2m to US$13.4m (A$28mA$18.7m).
Earlier this month, Sweden’s BNPL Klarna saw its valuation fall by 85% in just 12 months from its valuation of $45.6 billion in June 2021 when it raised $639 million. The world’s second most valuable fintech raised $800 million in a round that valued the company at $6.7 billion ($9.74 billion).
Local fintech Airwallex hopes to defy gravity and reportedly wants to keep its valuation at $7.6 billion as it looks set to raise more than $150 million.
In its letter to investors, Square Peg’s Paul Bassat wrote: that at the June 30 valuations, the VC had a net IRR of 32%, aggregated across all our funds since inception, and returned $582 million to investors through 11 different exits at an IRR of 42%.
“No Australian technology venture capital fund (past or present) has had as many exits or capital returns as we have and that is one of the things we are most proud of,” Bassat wrote.
“We are now entering a more difficult phase for emerging technology markets, as well as the potential for a major economic slowdown. We don’t know its duration or severity, but we think we are very well prepared as we work through the next period.”
Partner Craig Blair has issued a statement to Startup Daily saying that the latest investor update is in line with the market and expected given the current economic conditions.
Like other VCs, we sought an independent valuation from a big four accounting firm and made some adjustments to valuations, but our fundamental beliefs have never been stronger,” he said.
“These changes do not reflect our beliefs in the relevant companies – they are an acknowledgment of movements in public comparables for our material, late-stage positions and an important measure for our pension investors.”