Within the Canadian start-up landscape, Shopify is the belle of the ball.
Having just raised $15-million less a year after taking its first investment round, Shopify now has the financial clout to strengthen its status as one of the leading services for ecommerce software companies looking to quickly and easily establish an online presence.
It has been a whirlwind for the Ottawa-based company, which was started in 2004 but has moved into high gear in the last couple of years. With 15,000 customers and lots of cash in the bank, the world is Shopify’s oyster.
In many ways, Shopify epitomizes what Canadian start-ups should or could be. Created after co-founder Tobi Lutke launched an online store to sell snowboards, Shopify evolved into a business that had enough traction to attract investment. Then, Shopify was able to grow even more to attract a major financing round that should let it make an aggressive push for market leadership.
Shopify stands in contrast to many Canadian start-ups that:
- Fail to gain enough sales traction, or;
- They are unable to attract enough financing to develop and grow or;
- They sell too early because they are not able to get a big financing round or;
- They are unable to resist the temptation of an offer that is good but not great.
For Shopify to raise $15-million is not only great news for the company but it could be a positive development for the Canadian startup community and maybe the domestic venture capital sector, which is starting to show signs of life again.
Lutke said while Canada has great engineers and a vibrant entrepreneurial ecosystem, the biggest problem is a lack of confidence. “Not a lot of companies do what we just did, and that is why not a lot of companies try it,” he said.
It doesn’t help that Canada’s venture capital industry has crumbled with many of the large fund posting terrible results before closing or going dormant. Lutke said many of the VCs’ woes were caused by partners who had strong backgrounds in telecommunications as opposed to having start-up experience.
With more attractive investment laws and the recognition there are many attractive opportunities, more U.S. investors are coming north of the border. Lutke said Shopify’s profile has seen it become seen as a “connector”, and that they get daily e-mails from U.S. investors looking for introductions to Canadian start-ups.
In the scheme of things, Shopify raising $15-million could have a valuable ripple affect for Canadian start-ups. The fact it took on a big investment rather than selling out is the kind of thing that will hopefully embolden Canadian entrepreneurs who can see a home-grown example of a company boldly going for it.