Canva acquires genAI startup Leonardo.AI

Canva acquired generative AI content and research startup Leonardo.AI for an undisclosed sum. The Australia-based Leonardo.AI launched less than two years ago and boasts 19 million registered users. Its image- and video-generating tools are used by professionals across advertising, marketing, ecommerce and other industries.

Canva will continue to invest in Leonardo’s standalone platform while setting the startup’s 120-person team of designers, researchers and developers to grow Canva’s genAI offerings.

The deal surpassed Leonardo.Ai’s last funding round valuation of $80 million and might be challenged by the Australian Competition and Consumer Commission, according to The Australian Financial Review.

Leonardo.AI. Founded in 2022, Leonardo.AI allows users to create professional-grade visual assets in seconds. Its new foundational model, Phoenix, aims at achieving unparalleled prompt understanding and execution.

A look at Leonardo.AI’s sizzle reel shows the genAI’s ability to format images and videos in distinct styles, from photorealism to more painterly graphic themes. It allows users to enter simple prompts, sketch new images with AI and custom-train models for specific projects.

“Joining the Canva family means we can invest more deeply in scaling our AI research efforts globally, and move even faster to deliver new features and functionality to creatives worldwide,” said JJ Fiasson, Leonardo.AI’s founder and CEO, in a press release.

Canva’s acquisition journey. In March, Canva acquired U.K.-based Affinity, a specialized image editing tool for advanced users. In 2022, Canva acquired data visualization platform Flourish. Other key acquisitions includes Smartmockups (now Canva Mockups) and Kaleido.ai, creator of a one-click background removal tool, remove.bg.

“This field is constantly evolving, and Leonardo’s technical leadership and community impact can’t be overstated,” said Cameron Adams, co-founder and Chief Product Officer of Canva, in a release. “Bringing our worlds together will accelerate each of our teams’ work, taking us from strength to strength, and we can’t wait to get started.”

AI for creators and businesses. All told, Canva’s eight acquisitions since 2018 complement each other as Canva continues to expand its all-in-one suites enabling creators of all skill levels to make cutting-edge visual assets and collaborate with team members.

The company made a concerted effort in recent years to grow B2B customers among enterprises and SMBs. Canva currently has over 190 million active users and, as of March, had 16 million paying users. Canva is used by people at 95% of Fortune 500 companies.

Dig deeper: How Canva is approaching businesses with AI tools

A study by Canva and MMA Global found that 30% of CMOs and senior marketers brought creative work in-house in the last year, and 31% plan to do so in the next year.

In addition to Canva’s Magic Studio AI-powered tools, the company introduced work kits geared to specific business teams as well as adtech apps allowing marketing teams to design digital ads in-house.

With its launch in 2013, Canva empowered individual users by providing low-cost tools that anybody could use to create professional-level visuals. More robust enterprise offerings make Canva a direct competitor to Adobe.

At the same time, popular platforms for creators like TikTok aim to make it easier for creators to edit through TikTok’s CapCut app. TikTok parent company ByteDance plans to invest over $2 billion in an AI hub in Malaysia, though this technology will likely stretch far beyond video editing capabilities to help bolster ad and user experience.

Why we care. It’s too early to tell how Leonardo.AI’s genAI technology will surface in Canva’s Magic Studio or in other tools. Canva aims to be an all-in-one destination for individuals and organizations. No doubt Leonardo.AI’s simple prompts and fast turnaround for images and videos adds to the ease of use that allows large teams of non-specialized users to collaborate. GenAI tools are making it easy and affordable for users to create images and videos at scale. Canva is using AI to chart a middle path to compete with Adobe enterprise offerings and super-empowered individuals using TikTok’s native technology.