Ottawa software company Shopify Inc. has filed to go public, a hotly anticipated development observers say could put Canada back on the global technology map following the downfall of homegrown giants Nortel Networks Corp. and BlackBerry Ltd.
The company, which has grown at a furious pace by enabling retailers to manage their businesses over the Web, revealed its plans in a U.S. Securities and Exchange Commission filing Tuesday to sell up to $100-million (U.S.) worth of subordinated class A shares on the New York Stock Exchange and to list its shares on both the Big Board and the Toronto Stock Exchange. The offering is led by Morgan Stanley, Credit Suisse and RBC Dominion Securities.
The Shopify IPO is expected to be the first of a series of high-profile public offerings from upstart Canadian tech companies, bringing a buzz to the sector not seen since BlackBerry was crowned the world's fastest-growing company six years ago.
"This is our first gold medal contender" of the current era, said Chris Albinson, a Canadian-born Silicon Valley venture capitalist and co-founder of the C100, an organization that links Canadian startups to U.S. partners.
Shopify more than doubled its revenue in each of the past two years, to $105-million in 2014, and almost doubled them in the first quarter ended March 31, to $37.3-million over the same period a year earlier.
The company lost $22.3-million last year and indicated the ink could stay red for a while as "we expect to make significant expenditures to expand our business in the future."
Shopify has over 162,000 merchant clients, most of them in the United States, who not only sell online over Shopify's Internet platform, but can also use its software on tablets in physical stores to manage transactions, inventory, accounting and other tasks.
Paul Lem, an Ottawa entrepreneur who has known Shopify's 34-year-old CEO and co-founder Tobi Lutke since he was running the firm out of a downtown coffee shop, said the company's success "is the stuff dreams are made of. You hear stories like this all the time in Silicon Valley, two guys who start out in their garage. They've managed to pull it off here in Ottawa."
The company's registration document notes it has 632 employees and values people who get things done, "build for the long term, focus on simple solutions, act like owners [and] thrive on change."
Shopify began life 11 years ago as an online snowboard retailer. Mr. Lutke, a cerebral, eloquent German-born programmer who set up in Ottawa because his wife is from the area, wasn't successful peddling boards, but his software was so good that he began to field requests to build websites for other merchants.
His fledgling company rebranded itself as a software provider in 2006 and quickly found success as a subscription software firm, attracting big venture capital dollars. Through several fundraising rounds, Shopify raised $122-million from investors in the U.S. and Canada; its last financing in December, 2013, valued the company at $1-billion.
The company bears the hopes of tech industry supporters in Canada who have felt defeated by the fall of past giants and a string of sellouts at modest prices by promising domestic tech companies. "Success is not selling your company for $150-million, but building a big, public company," the venture capitalist Mr. Albinson said.
Mr. Lem said Shopify also represents "the first IPO of our generation" of younger, digital-savvy entrepreneurs who built their businesses on the Internet, while the Ottawa tech giants of the last generation made the equipment used to build the guts of the Internet.
Shopify isn't just an e-commerce software provider, it's also an open platform to which retailers can add their own custom apps: There are more than 900 apps integrated with Shopify, making it a fertile ecosystem for other entrepreneurs, some of whom have in turn raised their own venture capital funds to grow on the Shopify platform.
The company's success comes at a volatile time for the retail industry. The closing of 66 Future Shop electronics stores last month underlined the rapid pace at which retail sales are shifting online, leaving bricks-and-mortar outlets as showrooms for shoppers who then buy online at lower prices.
Canadian retail e-commerce sales are expected to almost double to $43.95-billion by 2018 from 2013 levels, according to researcher eMarketer. Amazon.com Inc. has led the way in stealing business from conventional retailers, while Wal-Mart Canada Corp. and others are racing to shore up their online selling.
"The Internet can be a disruptive force in retailing and no retailer is truly immune," said Jeff Doucette, general manager of mobile researcher Field Agent Canada.
Leading that disruption is Shopify, Mr. Lutke made clear in a letter included as part of the SEC filing. "I want Shopify to be a company that sees the next century," he wrote. "To get us there we not only have to correctly predict future commerce trends and technology, but be the ones that push the entire [retail] industry forward."