Shopify Inc., the Ottawa startup that exploded into a $70-billion company by providing an e-commerce platform for entrepreneurs, is now fuelling the success of other startups through its growing list of employees now doubling as angel investors.
The Shopify angels are being likened to a group of former PayPal Holdings Inc. employees and founders who have gone on to start and back other technology companies such as Tesla Inc., LinkedIn, YouTube and Yelp. It’s also happening with alumni at other companies such as Uber Technologies Inc. and Airbnb Inc.
Some of the angels are founders of companies bought by Shopify over the years, and are using the proceeds to help fuel Canada’s next generation of entrepreneurs. The group also has a Slack channel at Shopify devoted to talking about angel investing and recently organized its first meetup to discuss strategies on investing in Canada’s startup ecosystem.
“The fact that there are a number of us doing it at Shopify for other companies is amazing,” says Harley Finkelstein, Shopify’s chief operating officer.
While most of these angels are successful entrepreneurs in their own right, there is no guarantee their investments will turn out to be winners. But it’s a risk they’re willing to take.
Robleh Jama, the founder of mobile app studio Tiny Hearts, which was acquired by Shopify in 2016, is among the group of angels looking to pay it forward with his money and time.
“One of the reasons I’m investing, besides the fact that I’m very curious and I think it’s a great way to learn about different industries and to help entrepreneurs, is that I want to give back,” says Mr. Jama, an angel investor and senior product lead at Shopify. “I’m a big fan of company-building and supporter and backer of entrepreneurs."
Mr. Jama’s angel focus is on Toronto-area founders from diverse backgrounds doing business in areas such as health and wellness. Some of his investments include pet-food maker Kabo Fresh Dog Food, female fertility company Lilia and health-technology company Jack. He’s also a backer of Muslim-focused toy company Zileej Inc., behind the Salam Sisters dolls that aim to entertain and empower girls.
“Part of it, I think, is our duty to help the ecosystem to create more Shopifys that are based in Canada,” Mr. Jama says. "What we are doing aligns with the Shopify mission of inspiring that next wave of business owners and independents."
Mr. Finkelstein says there’s no pressure for Shopify staff to become angel investors. He says he believes it’s just part of the company’s DNA.
“It’s foundational at this company that we have people who care about entrepreneurs,” Mr. Finkelstein says. “We all do it to a different extent, but I think all of us do it for the same reason – we deeply believe entrepreneurship is important … and now that we’re fortunate to have a bit of money we can do something [to support it].”
Mr. Finkelstein has personally invested in more than 20 companies to date, including Spartan Bioscience Inc., Integrate.ai, meeting-management startup Fellow Insights Inc., hydroponic grow box company Grobo and Wolf Down, a restaurant in Ottawa inspired by German street food. He was also an early investor in food delivery service SkipTheDishes, which sold to Britain-based Just Eat PLC in 2016.
“The common thread is that these are founders that I believe are really interesting and impactful and will do great things,” he says.
And while the sums may not be huge, often between $25,000 or $50,000, Mr. Finkelstein says the funds offer validation for founders to press on with their business plan.
“Having someone who believes in you is important,” he says, citing the example of Shopify’s first angel investor, lawyer and former telecom executive John Phillips. “When someone who’s had some success says, ‘Hey, I not only believe in you … but I’m willing to give you some money to validate [it],’ that’s an injection of confidence. Often that’s the difference between being successful or not."
Arati Sharma, Shopify’s director of product marketing, and her husband, Satish Kanwar, the company’s vice-president of product, became angel investors after Shopify bought their user experience and design company Jet Cooper in 2013. (Mr. Kanwar founded Jet Cooper with Verne Ho, Shopify’s director of user experience.)
In 2019, Ms. Sharma took charge of the couple’s angel investing portfolio with a focus on Toronto-area companies that have at least one female founder and/or woman on their executive team. The couple have invested about $10,000 to $100,000 in companies such as Willful, Lilia, Juno College of Technology (previously known as HackerYou), Responsible Cannabis Use and Niu Body, to name a few. The couple also invests their time mentoring founders in their areas of expertise, such as marketing and technology. “When people are looking at angels, they are also looking beyond just the cheque they’re going to cut. They’re looking at the expertise they bring to the table,” Ms. Sharma says.
Daniel Debow, head of corporate development at Shopify and a long-time angel investor, mentors other entrepreneurs who want to become angels after they’ve sold their startups.
“This is a pay-it-forward activity,” says Mr. Debow, who joined Shopify in early 2019 after it acquired Helpful.com, a video messaging for business service he co-founded with David Pardy and Farhan Thawar. “You’ve been given a ladder up so now you have to reach down and pull other people up.”
It’s also “incredibly gratifying,” he says of angel investing. “It’s not really about the money, but the experience of being part of the growth that can be recycled back into the ecosystem and help others have the same success.”
Touched by angels – these startups are getting a boost from Shopify staffers
Kabo Fresh Dog Food
It was after losing their seven-year-old chow chow mix Kabo to stomach cancer in 2018 that identical twin brothers Vino and Vijay Jeyapalan decided to turn their concern for canine health into a company.
The brothers, entrepreneurs who also worked on Facebook’s e-commerce team in Toronto, spent about a year consulting with pet nutritionists about the right food to feed different dog breeds to help them live longer.
Last year, they launched Toronto-based Kabo Fresh Dog Food, a pet food subscription service that delivers “human-grade, gently cooked” dog food to owner’s doors, with proportions based on breed and dietary needs.
Kabo is rapidly expanding across Canada with the help of $900,000 it has raised to date from angel investors, including a handful of Shopify employees. One key investor is Robleh Jama, Shopify’s senior product lead, whose company Tiny Hearts was acquired by the Ottawa tech giant in 2016.
The brothers knew Mr. Jama from the Toronto startup scene and heard he was looking to fund new ventures. The three of them met over coffee near Shopify’s offices in downtown Toronto, where Mr. Jama laid out his strategy to invest in founders with diverse backgrounds and a great product or service.
The angel money has been hugely helpful, but Vino says the expertise the investors bring, particularly when it comes to online purchasing behaviour, has been invaluable. “We needed to rely on that type of advice early on for us to grow as fast as we did.”
Today, Kabo says it has served more than 110,000 meals and has about a dozen employees. It recently expanded into the Vancouver area and is available for dog owners in Calgary, Winnipeg, Montreal and Halifax. The goal is to make Kabo available across Canada.
“We credit a lot of our expansion to the key angels we’ve been able to find that have expertise in consumer product technology,” Vino says. Meantime, he and Vijay have adopted a bulldog named Milos, whose favourite food is Kabo’s savoury beef recipe.
Responsible Cannabis Use
The legalization of recreational cannabis has created a huge learning curve for Canadians, and an opportunity for educational startup RCU Group Inc., known as Responsible Cannabis Use (RCU).
Toronto-based RCU, founded a month before legalization took effect in October, 2018, offers products for employers, employees and consumers around cannabis rules and safety.
“We realized everyday questions that came with cannabis legalization weren’t being answered,” says chief operating officer Karina Karassev, a former Sun Life Financial employee who co-founded RCU alongside Ilia Larionov, chief design officer, and Afshin Mousavian, chief executive officer.
RCU’s main products include Dontbesorry.ca, an educational website that details the cannabis laws and impaired driving penalties across Canada; CannEd, which provides cannabis education for employers and employees; and CannEd Retail, an online, in-store education program for cannabis retailers.
Mr. Mousavian was working at Demac Media – an e-commerce design and development agency that consulted with a number of companies and provinces on their cannabis e-commerce technology – when the three RCU co-founders realized there was an opportunity in the “unsexy” side of cannabis. The idea brought them together to start RCU and develop educational products that address safety and responsibility for cannabis.
Since the launch, RCU has expanded its offerings thanks to $500,000 in seed funding from a number of investors, including some former colleagues at Shopify where Mr. Larionov and Mr. Mousavian once worked.
Some of those investors include Arati Sharma, Shopify’s director of product marketing, and her husband Satish Kanwar, vice-president of product.
“They have a really good understanding of what it takes to build out technology and build out startups and … scale them to build products,” Mr. Mousavian says. “What we got from the angel investors was a runway that allowed us to not be forced to release products when they’re not ready for market.”
Ansarullah Ridwan Mohammed was working at a development bank in Saudi Arabia when he came up with the idea to start a toy brand that reflected his Muslim faith.
“Kids are bombarded with a very narrow stream of content coming out of mostly the West. I saw a need for more creative, innovative products that represent different cultures around the world,” says Mr. Mohammed, who was born and raised in Trinidad and Tobago and educated in actuarial science at the University of Waterloo.
In 2012, as a side gig, Mr. Mohammed created the 5Pillars board game that teaches the basics of Islam. He then hired Australian designer Peter Gould, also a Muslim, to work on building out the game for different audiences and markets as well as online.
Then, in 2015, as the American Girl doll craze continued, the pair came up with the idea to develop a line of diverse dolls for Muslim girls. Mr. Gould has three children, including two daughters, and felt they needed more toys to reflect their faith. They came up with Salam Sisters, a line of five dolls that each come with removable headscarves and their own storyline.
“We wanted to create products for kids to see their culture represented in a positive, fun way,” Mr. Mohammed says.
In 2016, Mr. Mohammed left his job in Saudi Arabia and moved to Dubai to set up Zileej Inc., a company to house a growing line of Muslim-centric brands to reflect the fast-growing Islamic lifestyle market. Zileej, in Arabic, is the mosaic tilework designed from individual pieces that “create something beautiful,” Mr. Mohammed says.
About two years later, the company’s headquarters were moved to Toronto from Dubai. Mr. Mohammed said they chose Canada for its cultural diversity and Toronto for its robust startup scene. It was there he met with entrepreneur and Shopify product leader Mr. Jama, who had previously purchased some of the Salam Sisters dolls for his three girls.
Mr. Jama had been a mentor to Mr. Mohammed after he moved to Canada, and then became an angel investor, alongside family and friends of the founders who have put money into Zileej.
“Robleh connected with what we are doing,” Mr. Mohammed says, bringing both money and startup expertise to the table. “Who better to bring on than someone who sold his company [Tiny Hearts] to Shopify and is passionate about what we are doing.”