Canva acquires Leonardo.ai to boost its generative AI efforts

Canva has acquired Leonardo.ai, a generative AI content and research startup, as the company looks to broaden the scope of its AI tech stack.

The financial terms of the deal weren’t disclosed, but Canva co-founder and chief product officer Cameron Adams said it’s a mix of cash and stock. All of Leonardo.ai’s 120 employees will be joining Canva, including the executive team.

“Leonardo will continue to run independently of Canva with a focus on rapid innovation, research and development, now backed by Canva’s resources,” Adams told TechCrunch. “We’ll keep offering all of Leonardo’s existing tools and solutions. This acquisition aims to help Leonardo develop its platform and deepen their user growth with our investment, including by expanding their API business and investing in foundational model R&D.”

Sydney-based Leonardo.ai, founded in 2022, was originally meant to focus on video game asset creation — the startup’s founders met while working at a video game company. But then Leonardo.ai’s team decided to build out the platform to meet more scenarios, like creating and training AI models for image creation across industries such as fashion, advertising and architecture.

Today, Leonardo.ai offers collaboration tools and a private cloud for models, including video generators, as well as access to APIs that let customers build their own tech infrastructure on top of Leonardo.ai’s platform.

Leonardo.ai differentiates itself from other generative AI art platforms by the amount of control that it gives users, co-founders Jachin Bhasme, J.J. Fiasson and Chris Gillis told TechCrunch in an interview last December. For example, Leonardo.ai’s Live Canvas feature enables users to enter a text prompt and then make a quick sketch of what they want the end result to look like. As the user sketches, Leonardo.ai creates a photorealistic image based on both text and sketch prompts in real time.

It’s unclear how Leonardo.ai trains its in-house generative models, like its flagship model Phoenix. It’s an important question to ask about any generative AI service, given the legal ramifications of training models on copyrighted content sans permission. Leonardo.ai’s PR kept it vague when we asked for clarification, saying only that the models are trained on “licensed, synthetic and publicly available/open source data.”

Canva itself has been relatively supportive of creators in adopting generative AI, committing $200 million over the next several years to pay creators who consent to having their content used to train the company’s AI models.

Doubling down on AI for growth

Leonardo.ai has over 19 million registered users, and its tools have been used to create more than a billion images.

Adams says Leonardo.ai will help contribute to Canva’s Magic Studio generative AI suite. The company had raised over $38.8 million in capital from backers including Smash Capital, Blackbird, Side Stage Ventures, TIRTA Ventures, Gaorong Capital and Samsung Next prior to the acquisition.

“We’ll look to integrate Leonardo’s technology into Magic Studio, which we’re very excited about,” Adams said. “This might include making existing Magic Studio tools more powerful, or introducing new generative AI capabilities powered by Leonardo’s models directly in Canva. It’s early days, and we’ll be coming together right away to determine how this looks, but we’re excited to expand what our users are able to do with AI on Canva.”

Canva has been investing in generative AI tools since December 2022, beginning with the copywriting assistant Magic Write. But, eyeing an IPO, it has ramped up its development efforts in recent months through both internal projects and acquisitions. In February 2021, Canva acquired Kaleido, which makes a drag-and-drop background removal service for images and video. Adams said Kaleido laid the foundation for much of Canva’s more recent generative AI efforts.

Leonardo.ai is Canva’s eighth acquisition overall and its second acquisition this year, coming three months after it bought U.K. design company Affinity for an estimated $380 million. Canva also owns presentations startup Zeetings, free stock photography sites Pixabay and Pexels, and Czech-based product mockup app Smartmockups.

Canva, founded in 2012, has raised more than $560 million (most recently at a $26 billion valuation), and is pulling in close to $2 billion in revenue. It boasts over 180 million monthly users worldwide.

“It’s a significant but natural next step in our efforts to build the most powerful, all-in-one visual AI offering,” Adams said. “We’ve placed a strong focus on building an AI-powered workflow that includes generative solutions like image and design generation. Pairing that Canva workflow with new generative capabilities will help us continue to set our AI offering apart, and deliver new possibilities for the growing base of teams and enterprises using Canva.”