Canva Inc. launched an employee stock sale at a valuation of $42 billion, marking a significant leap in value for the Australian design software startup that’s betting on artificial intelligence for growth.

Employees can sell stock to new and existing investors, including Fidelity Management & Research Co. and JPMorgan Chase & Co.’s asset management arm, Canva said in a statement on Wednesday. The offer boosts Canva’s valuation more than 30% — it was valued at $32 billion in 2024.

Canva is adding artificial intelligence enhancements to its design tools in a push to juice revenue growth and gear up for a potential initial public offering. In April, it launched new products, including a conversation-based AI photo editor, seeking to attract corporate customers away from rival Adobe Inc.

Canva is locked in a battle for users with Photoshop and Lightroom maker Adobe, which is developing its own AI model tailored to its apps, called Firefly. San Francisco-based Figma Inc. is another strong contender, now valued at $34 billion after going public in July.

“This round has been significantly oversubscribed,” Canva Chief Operating Officer and co-founder Cliff Obrecht said. “The overwhelming demand from both new and existing investors is a huge vote of confidence in our momentum and the scale of what still lies ahead.”

Launched in 2013, Canva gained an early following for its ease of use in creating anything from wedding invitations to social media posts. Canva recorded more than $3.3 billion in annualized sales and now has over 240 million monthly active users, according to the company.

Startups often negotiate share sales for their employees as a way to reward and retain staff, and also attract external investors. With the share sale, the company run by Melanie Perkins can tap investor demand to provide employees with liquidity while still remaining as a private company. Investors have long viewed Canva as a candidate to go public, though the company hasn’t disclosed any concrete plans for such a move.