Authoredby Joyce Cheng, Director, Prime Remuneration Services
Canva’s valuation has just been marked down by more than $11 billion, and the story behind that number says as much about employee share plans as it does about the design giant itself.
Two of Canva's earliest and largest investors, Blackbird and AirTree, recently revalued their holdings, implying a valuation of US$34.9 billion, down 17%. On the secondary market, private-share broker Hiive has reportedly offered Canva stock at an implied valuation of around US$30 billion.
Canva's annual employee share valuation provides a further point of reference. An independent valuation conducted as part of the company's employee share plan process assessed Canva's value at approximately US$31 billion, compared with US$38.9 billion a year earlier. The valuation is used ahead of more than 5,000 employees becoming entitled to receive shares under the plan.
Based on those figures, Canva's valuation has fallen by more than A$11 billion over the past12 months.
For a company that has long been held up as a poster child for employee equity done well, it is a timely reminder that valuations move in both directions, and that employee share plans, however well designed, are exposed to that movement.
Ongoing shifts in market conditions are reshaping how companies of all sizes are valued. AI is disrupting established business models and creating new winners and losers seemingly overnight, capital is more expensive than it was a few years ago, and investors are placing greater emphasis on profitability and capital efficiency over growth at any cost. Together, these forces have created a materially different valuation environment from the one that existed just a few years back and Canva’s markdown shows that even the most successful private companies are not immune.
For companies with employee share plans, this has real implications.
Many options and rights granted in prior years — particularly through the technology boom of recent years — were issued at valuations reflecting a very different environment. Today, some of those grants may sit at or above current value. There is no requirement to reprice them, but the question is whether they are still serving their intended purpose.
Because equity only works when employees believe in it.
When options are out of the money, or a valuation reset makes a grant feel less valuable than it did twelve months ago, they quickly lose perceived value. This is especially true in sectors like technology, where equity has long been core to the value proposition used to attract and retain the engineers, product leads and senior operators who accept lower base salaries in exchange for meaningful upside. Employees disengage, and equity can shift from a meaningful incentive to something that is largely discounted.
In this environment, employee share plans can no longer be treated as static structures. They require active consideration to ensure they remain relevant, understood and aligned with employee expectations. This may involve reconsidering the type of equity being offered, how and when grants are made, how valuations are communicated internally, or, in some cases, whether existing exercise prices remain aligned with current market conditions.
Importantly, this is not purely negative.
Periods of valuation reset, like the one Canva is navigating, can create an opportunity to re-establish equity as a meaningful incentive. New grants made at more realistic valuations can carry genuine upside, restoring the link between performance and reward and for companies eyeing a future listing, getting this right now matters more than ever.
In the current environment, the question is no longer just what equity are we offering? but is it valued in a way that still makes it meaningful?
For companies that issued options in a different market environment, Canva’s experience is a useful prompt to reassess. Not because it is required, but because the effectiveness of equity depends on how it is perceived today.
The two factors generally come down to this: whether the plan structure remains fit for purpose, and whether it is motivational enough to achieve its intended outcome — to attract, motivate and retain employees. A plan can be technically sound, but if it no longer motivates in the way it was designed to, the impact can be lost.
At Prime Financial, we work with companies to review their employee share plans holistically, including how valuations are obtained and communicated, to ensure equity continues to function as a genuine tool for retention, alignment and long-term value creation.
If Canva’s $11 billion reset has you wondering whether your own plan still remains fit for purpose, or motivational enough to attract, motivate and retain your people, it may be time to revisit your approach.
The information contained in this article is general advice only and does not take into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs. You should consider the relevant product disclosure statement or other applicable disclosure document before making any investment decision. If you require advice that takes into account your personal circumstances, you should speak with a qualified financial adviser.
