With Shopify Inc. now grown from a startup e-commerce platform to one of Canada’s most valuable technology companies, its fortunes have spilled over into the ecosystem it created – bolstering its partner companies such as Winnipeg’s Bold Commerce.
On Wednesday, Bold will announce it has raised $22-million from Whitecap Venture Partners and Round13 Capital. After seven years of bootstrapping, the 275-employee company plans to use the money to add 200 more staff to its ranks to expand the scale and artificial-intelligence capabilities of its suite of e-commerce apps, the vast majority of which cater to Shopify merchants.
Ottawa-based Shopify has been lately trying to reframe itself less as a tool for e-commerce and more as a one-stop shop for retail entrepreneurs, expanding its in-house offerings to include services such as shipping and cash advances. Its proprietary app store, first launched in 2009, has been pivotal to the Shopify growth story, and companies such as Bold with high-demand apps have joined on its journey to massive growth. The company has deliberately structured itself as a service with core functionality with room for app developers to serve other, new and future needs – creating pathways for developers to build wealth of their own.
While Bold’s $22-million raise is not the largest among Shopify app purveyors – the New York-based marketing service Yotpo has raised US$101-million, for example – it is a vote of confidence from investors in the Canadian spillover of Shopify’s success. “To be part of the growth of the ecosystem was a great opportunity,” says Yvan Boisjoli, Bold’s chief executive officer, who co-founded the company with Jay Myers, Stefan Maynard, and Eric Boisjoli, Yvan’s brother.
Bold might be an exemplary case study in humble beginnings. Starting as “four guys building apps on the side,” Mr. Boisjoli says, they launched their first Shopify app in April, 2012, back when its store had dozens of apps, rather than thousands like today. (That year, Shopify processed US$742-million worth of orders, versus US$26.3-billion in 2017, its most recent full year of financial reporting.)
Bold’s first app aimed to help retailers upsell customers – but its creators took it down after their first user gave it a negative review. They called the user, talked it over, and tried to rethink their entire approach. “We didn’t put ourselves in a merchant’s point of view,” Mr. Boisjoli says. They asked themselves a hard question: “Were we trying to solve a problem for him or were we just trying to sell an app?”
Today, Bold offers 21 apps, most of which are e-commerce solutions, focusing on areas such as subscriptions, checkout, and customer loyalty. One key app is called the Bold Brain, which uses artificial-intelligence technology to recommend items to customers based on their shopping history. While Bold had been profitable as a self-funded company, Mr. Boisjoli says, the investment from Whitecap and Round13 will allow it to expand globally and dive deeper into AI techniques such as machine learning in its apps to streamline and automate more processes for retailers, making each as profitable as possible.
Whitecap partner Shayn Diamond says Bold’s ability to stay at the forefront of digital retail, and its potential to expand to other e-commerce platforms beyond Shopify, attracted his firm to invest. “They’re not pegged to just one use case within the e-commerce space,” he says. “They’re looking forward two, three, four, five years to what’s new [and] up-and-coming … to satisfy the full end-to-end suite of e-commerce.”
Shopify’s ever-growing stable of “partner” companies such as Bold has become crucial to its growth. While Shopify’s final 2018 numbers are not yet available, the company says that while it generated revenue of US$673-million in 2017, its partners generated US$800-million from its platform. Merchants use an average of six apps in their stores; 84 per cent of those apps have earned revenue, Shopify says. In some app-success cases, such as Montreal’s Return Magic, Shopify has purchased partner companies to bring their tech directly into the fold.
“We built this partner ecosystem to say, ‘Instead of building everything ourselves, let’s give merchants what most people need most of the time, and for everything beyond that, let’s find really good third-party developers and agencies and freelancers to build those features,'” says Harley Finkelstein, Shopify’s chief operating officer.
Whereas some popular app stores – such as Apple Inc.'s – take a 30-per-cent cut of revenue, Shopify takes 20 per cent, Mr. Finkelstein says. “We want to create more value for our partners than we capture for ourselves, because fundamentally we believe that’s how you build a real ecosystem, a real platform.”