The archive · Commerce & Marketplaces · Financial decision · 2006–2013
Shopify's 2013 bet: one $100M platform for online stores and physical retail
Shopify raised a $100M Series C in December 2013, betting merchants who sell online would run physical stores on one platform.
Shopify
What the business is
Shopify sells subscription software that lets anyone build a polished online store; by late 2013 it was adding Shopify POS so the same merchants could also run physical retail on the platform.
How it started
Tobias Lütke and his co-founders started Shopify after trying to sell snowboards online in 2006 and finding the options wildly expensive or painfully complicated; they built their own store, then decided the software was the business and stopped selling boards. Since 2006 the company focused on making it easy for anybody to create a beautiful and powerful online store.
What happened
By December 2013 Shopify had over 300 employees and powered more than 80,000 online stores in 100 countries, with merchants on track to sell well over $1.5B in products during the year. On 2013-12-12 Lütke announced a $100M Series C led by OMERS Ventures and Insight Venture Partners, with Bessemer Venture Partners, FirstMark Capital, Georgian Partners and Felicis Ventures participating, and tied the raise to the new Shopify POS: the ambition was to be the first company to fuse every distinct part of running a modern commerce business — online and physical — into one product.
No ending yet — it is still running.
Background
Shopify sells subscription software that lets merchants build and run online stores, a business Tobias Lütke started after trying to sell snowboards online in 2006: the available options were wildly expensive or painfully complicated, so he and his co-founders wrote their own store and then decided the software was the company.
By December 2013 Shopify reported over 300 employees, more than 80,000 online stores in 100 countries, and merchant sales on track to pass $1.5B for the year. On 2013-12-12 Lütke announced a $100M Series C led by OMERS Ventures and Insight Venture Partners, joined by Bessemer Venture Partners, FirstMark Capital, Georgian Partners and Felicis Ventures.
The round was tied to Shopify POS and the company's ambition to be the first product to fuse every part of running a modern commerce business, online and physical, into one place. Shopify's stated numbers are the company's own claims from the announcement, and the material records no later outcome, so the case stops at December 2013.
What has to be true
- Shopify's wedge was a subscription store that was fast and beautiful where incumbents were expensive and complicated, which let it win merchants who could not afford an enterprise suite.
- The merchants already trusted Shopify with their online store, so physical retail was a product extension for the same account rather than a brand-new market to win.
- The $100M round came with proof of demand — 80,000+ stores and $1.5B+ in merchant sales — which made the expansion look like acceleration instead of a leap.
- The bet's open edge was adoption: nothing in the announcement proved merchants would run their physical counters on Shopify too, so the round priced a question only the POS rollout could answer.
What can be applied
A platform bet can start in a niche and widen: by already owning the online store, Shopify could raise for physical retail as an extension of merchant relationships, not a new market.
Aftermath
As of 2013-12-12 Shopify had just announced the $100M Series C and the case stops there: the announcement itself is the event, and the material records no later outcome. The post's figures, 300+ employees, 80,000+ stores and $1.5B+ in 2013 merchant sales, are Shopify's own claims from the announcement.
Sources
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You just read one. Describe what you are building, and see who is betting on the same thing.
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