Shopify raises $7 Million Series A

http://www.shopify.com/press/articles/7-million-series-a-funding/

by faramarz • 16 years ago

58 35 16 years ago

shopify.com

steveklabnik4• 16 years ago

So much for "Bootstrapped, profitable, and proud," eh? http://37signals.com/svn/posts/2378-profitable-proud-shopify

That said, congrats to Shopify. You guys do great stuff, and your open source contributions are top-knotch!

faramarz3• 16 years ago

What I was thinking. I'm sure 37signal guys have something to say.

But you know what, I bet they got an amazing deal because of their leverage. how can you not take the money?

steveklabnik4• 16 years ago

Actually, re-reading my link, apparently they had angel money before, so they already weren't technically bootstrapped.

cal5k4• 16 years ago

They've already proven their business model, have tons of customers, are making a profit, and have a plan for scaling their business. This is the perfect time to take investment - regardless of whether they were bootstrapped to this point.

I don't think anything in the so-called "lean startup" philosophy runs counter to the idea of taking Series A financing when appropriate. Hell, even 37Signals took money from Jeff Bezos...

steveklabnik4• 16 years ago

Oh totally. Just commenting on the change, that's all. I certainly don't think 'lean' means 'never take money,' but it also does demonstrate that Shopify is a 'startup' and not a 'lifestyle business.' Maybe they always were, and I just didn't notice.

xal7• 16 years ago

Well as you can see, the post was taken out of the Profitable & Proud series and was renamed to a QA right after posting.

I guess we are not technically bootstrapped by some incredibly demanding definition of the term.

To me all those things - Bootstrapping, Angel money, Grants, VCs, etc - are just tangential tools in a pretty large toolbox that we as entrepreneurs can draw upon. There is no secret bootstrap society that you get to join if you do that just like there is no secret hammer society that you get to join if you only use hammers for all your carpentry jobs.

In any case, use the right tool for the job. We started a risky business in a crowded space so we bootstrapped. We ran out of cash so we got Angel money. We became profitable so we increased our own spend. We got really good at this and wanted to accelerate so we take VC money to get to our goals faster. It's not rocket surgery.

steveklabnik4• 16 years ago

Quite true. I've mentioned some of those things below, and I absolutely don't mean to denigrate your success, you guys are great. It's just changed the way that I see how you see yourselves, though I guess I should have been thinking that way all along.

Keep up the awesome. :)

babeKnuth• 16 years ago

It's not brain science either. :)

cal5k4• 16 years ago

Not a single Canadian VC in the bunch. A pretty good illustration of what's wrong with Canada's VC industry... it doesn't exist! ;-)

gawker• 16 years ago

The talent's here but most leave because of these non-existing VCs. Though we are getting better!

faramarz3• 16 years ago

Jevon Macdonald recently wrote a piece discussing a Deloitte study that suggests Canadian VC's arn't quite the fan of their own countrymen when it comes to startup investments compared to other nations.

http://www.startupnorth.ca/2010/10/28/what-do-canadas-vcs-re...

cal5k4• 16 years ago

Good think foreign investors are! I've seen quite a bit of interest recently actually from investors in the Middle East - a personal friend was searching for biotech funding for years and is days away from closing a major deal with a middle eastern fund (to start it in Canada). Couldn't get even a whiff from the stodgy Canadian VC industry.

xal7• 16 years ago

The last Canadian VC I talked to accused me of being uninterested in growing my company after I didn't want to show up for some event with their LPs...

Being insulted by a VC is almost a rite of passage up here.

karamdeep3• 16 years ago

That's horrible if true (and I have no reason to doubt that). However, methinks you've been talking to the wrong Canadian VCs...we're doing our best @iNovia to change those perceptions. I think the reality is VCs who act like jerks are going feel it in their pocketbooks when their deal flow and returns dry up. That being said, congrats on the round - great syndicate, great team and a great product.

Between Well.ca, Shopify and Beyond the Rack, Canadian E-Commerce companies seem to be on the cusp of big things...exciting times indeed.

RBr• 16 years ago

I was at a Toronto event in November that revolved around this exact topic.

http://www.aspectgraphics.com/ACCTO/A_TO_invite.html

Basically, it was a room full of startup folks, a couple of people with money talking and a few lawyers. It was more informative than it sounds.

In short, the question being asked was "what's wrong with Canadian Startup Capital?"

After the lectures and a lot of conversation about the topic with other Toronto based startup folks in addition to a few VC people, I boiled the problem down to these points:

1) We don't value our own work. To hit a product out of the park, we sort of assume (like the rest of North America) that we need to be in the valley. I don't think that this is unique of Canada though - I've talked to a lot of U.S. based startups outside of California that feel the same way.

2) Canadian investors have different investments. We like resources, land, oil, that sort of stuff. Investing in tech somehow seems un-natural to a lot of the folks with the Brewsters Millions type of money.

3) A lot of Canadian tech startups are founded in revenue. Shopify is a good example - they're making money. They need some money so they took funding, but they didn't start the company needing funding to survive.

Talking to a large number of Canadian startups over the last few years, I think that the previous point is the biggest problem with the Canadian VC industry. We simply don't ask for the money early and often enough to constantly remind people outside of the tech industry how much money it usually costs to get to revenue. A lot of the products grown in Canada are not erroneous in the least - the strong majority of them have customers and revenue in proportion to the costs they incur.

4) Last, many Canadian tech companies aren't solving big enough problems. Similar to the point above, we're focused on revenue. VC is a game best played when the players are ALL swinging for the fences. A lot of the problems that our current products solve are focused on those that have a limited number of customers so that we can quickly build and sell them a solution. VC's want to fund solutions that will impact very large groups of people, if not all 6.8 billion of us.

In the end, it's only a matter of time really. We'll have a few more Shopifies under our belt and then Film Industry won't be the only folks coming up North for a good deal :)

markbao2• 16 years ago

Curious to see if the founders retained control of the company after their Series A or not. There was a discussion earlier about this.

xal7• 16 years ago

yep we only sold a small minority.

markbao2• 16 years ago

Baller status. Congratulations, Tobi and team :)

3dFlatLander• 16 years ago

I've set up a number of shopping carts on shopify. It's been one of the best things that's happened to my freelancing life in a long time. Their documentation is a pleasure to read, and you can do some really nifty stuff without having to worry nearly as much about security (looking at you OSCommerce).

subpixel• 16 years ago

I'm working on some Shopify projects and have found the documentation lacking (i.e. written in broken English, out-of-date regarding newest code developments, and some links point to missing documents).

I have tons of respect for the company and the team, but the documentation isn't given first-class status in my experience.

xal7• 16 years ago

Totally agreed. We will get much better at this in the future. Unfortunately 2/3 of the funding team (me included) are english-second-language.

ROFISH• 16 years ago

Maybe it's our own experience, but the "nifty stuff" is quite limiting. We've been trying to get combo pack support (ala Amazon's buy this + that together and get $5 off), and it's been a total NIGHTMARE.

For a basic general cart, it's great. But especially for an e-commerce system that you rely on your store for 100% of your income, the second you want to try anything nifty, such as combo packs, flat rate box shipping (mostly calculations involving if a cart can fit in the flat rate box), coupon codes for only specific products, and random general issues (such as 100 variants per product max, which is annoying when trying to hand-create combo packs with 200-300 variants), I'd suggest something else.

josefresco• 16 years ago

I've had great results from FoxyCart, even with custom code.

navyrain• 16 years ago

I was thinking about writing a few apps for Shopify, so this might just push me over the edge.

Any ideas/hints on how they'll expand the API? There are a few different calls I wish were there.

xal7• 16 years ago

edward@shopify.com is the right person to talk to. We add new API's constantly as it's by far our biggest development focus. I'd also love to hear your thoughts, you can reach me at tobi@shopify.com

cromulent• 16 years ago

Good on them, they have a fine product and contribute back. I hope they all make a ton of money. My wife is an e-commerce trader and she's never written a line of code, and she uses Shopify. And I am not support, and that's good for everyone under this roof.

lionheart• 16 years ago

Congratulations! Shopify is a big inspiration for me. My current project is a similar platform for selling digital subscription products and I'm hoping to one day get it to the level Shopify is at right now.

Plus, their support is amazing. I have no idea how they can manage to keep it on this level with so many people.

callmeed• 16 years ago

Keep at it. One of our products basically a shopify for photographers and does really well.

xal7• 16 years ago

Great field, this is a very common request we are getting but it's not a true market fit for Shopify. Consider building it as a Shopify app so that you can market it to our customer base and through our sales.

code_duck• 16 years ago

Shopify certainly has a good deal going for themselves, with that they take a monthly fee AND a percentage of revenue. Nobody else in this market has been gutsy enough to ask for both!

Shopify raises $7 Million Series A

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