Ottawa startup Shopify, which makes software used by thousands of businesses to sell their products online, has raised $100 million to expand its software for retailers to use in their physical stores.
The large amount of venture capital is being put forward by five investors, led by the investment arm of OMERS, the pension fund for Ontario municipal employees.
Three Ottawa entrepreneurs launched Shopify in 2006 as an e-commerce software platform that businesses could use without having to develop their own websites.
With the new investment, Shopify plans to expand an iPad app it has developed that allows businesses to swipe credit cards and email receipts in-store, along with track sales.
At Shopify's office in Ottawa's ByWard Market, some employees sit in beanbag chairs working on laptop computers, while others take a break to play video machines or pinball. But the loft-like space is getting cramped, and Shopify plans to move in the coming months. The company has already doubled its staff this year, and with the $100 million dollars in venture capital, it sees hiring nearly another 200 people, mostly in Ottawa but also in Montreal and Toronto.
The company has ambitious plans for the unusually large influx of investment, said Shopify's chief platform officer Harley Finkelstein. It hopes to move beyond its focus on e-commerce, to providing software merchants can use in their stores that will turn an iPad into a cash register.
"We might be based in Canada but we're trying to disrupt and democratize retail around the world," said Finkelstein.
Shopify banking that retail is set to change
Finkelstein says the conventional method of shopping, where a person selects his or her items then heads to a cash register, is set to change. Already, he says some businesses are starting to process credit cards on a mobile device and email the receipt.
The idea behind Shopify's foray into physical retail is to allow merchants to process payments anywhere, Finklestein explained, whether that's at a trade show or farmer's market, and gather sales and inventory data from in-store and online sales in one program.
With 80,000 businesses currently using its platform for their online stores, Mark Noonan, a partner at Deloitte's Ottawa offices, thinks Shopify is well-positioned.
"Looking at it as a pure commerce company is just an area that has exponential growth, really game-changing technology," said Noonan.
Company well positioned, says analyst
In the past decade, it has been difficult for technology companies in Ottawa to raise more than a couple of million dollars in venture capital at a time, Noonan said, leaving them in a state of perpetual fundraising and unable to take their companies to the next level.
That Shopify has raised a "huge" sum of 100 million dollars, Noonan said is a testament both to the company's position and growth, and also to the mindset of the investors. The largest investor is the venture arm of OMERS (the Ontario Municipal Employees' Retirement System), along with Bessemer Venture Partners, FirstMark Capital, Georgian Partners and Felicis Ventures.
"We see U.S. companies doing that a lot. They will invest big to win big. Whereas the Canadian mentality in the past is to not get too risky," said Noonan. "The management team at OMERS understands technology, they understand the importance of technology to Canada and where we want the industry to go. And being a supporter of that with those kinds of pockets, those kinds of resources, will set us up very well into the future."
For its part, Shopify's Finkelstein said it was important for the Ottawa company to find Canadian investors. The endorsement that they have built a strong business is almost as important to Finkelstein as the $100 million itself.
"In some ways, I think Shopify is only now getting started."