Shopify has published Shopify Ventures along with major updates like removing 15,000 fake reviews, releasing Shopify Collabs for merchants and creators based in the United Kingdom, testing one-page checkout and shipping Shopify Marketing Tools. The big announcements mark a new beginning for Shopify which recently cut staff by 20 percent to focus on its “main quest”.
CEO Tobi Lutke took to Twitter to make the announcement about Shopify Ventures and how entrepreneurs can make use of it. “This is something we have been doing for a while, but we never put a website together. If you are a founder in the commerce space, and are looking to raise funds, you should come build with us at (Shopify Ventures),” he tweeted.
Shopify President quote-tweeted Lutke’s post, reiterating the objective of Shopify Ventures. “Build the future of commerce with us at Shopify Ventures,” he said.
Build the future of commerce with us at @Shopify Ventures. https://t.co/NOXhiHx6vo
— Harley Finkelstein (@harleyf) June 28, 2023
Focus on Main Quest
In May, Shopify terminated 20 percent of its staff and sold out Shopify Logistics to San Francisco-based supply chain management company Flexport. “Shopify finds it useful to talk about the difference between main quests and side quests internally. The main quest of the company is its mission, the reason for the company to exist. Side quests are everything else. Side quests are always distracting because the company has to split focus. Sometimes this can be worth it, especially when engaging the side quest creates the conditions by which the main quest can become more successful,” CEO Lutke said in a memo to his staff.
“I think that we have built the best commerce platform in the world for that. Technological progress always arcs towards simplicity, and entrepreneurs succeed more when we simplify. But now we are at the dawn of the AI era and the new capabilities that are unlocked by that are unprecedented. Shopify has the privilege of being amongst the companies with the best chances of using AI to help our customers. A copilot for entrepreneurship is now possible. Our main quest demands from us to build the best thing that is now possible, and that has just changed entirely,” he added.
Lutke’s statement explains Shopify’s desperate attempts to restore its focus on the main quests and the recent updates and announcements.
Highlights of Shopify Ventures
Shopify Ventures offer collaborations and capital to founders to define the future of e-commerce. On its website, Shopify spoke of three major highlights of the new venture capital program.
- Planning for the Century
The Canadian e-commerce company has a “100-year horizon” behind the making of Shopify Ventures. The goal is to create a model of support for the development of e-commerce for the next 100 years. “Long-term progress over short-term gains. We champion companies shaping the next century of commerce.”
- Empowering Merchants
Shopify Ventures comes in line with the company’s obsession with its merchant partners. The e-commerce platform supports merchants not only till they set up online stores, but also to sell products and manage commerce operations effortlessly. “Centering problem-solving. We build solutions that help with ever-changing merchant and consumer needs,” Shopify states.
- Connecting World
Even though Shopify is most popular among merchants from countries like Canada, the United States, the United Kingdom and Australia, the multinational company’s ultimate goal is to help connect world economies. “Powering the world’s economies. We help each founder do their life’s work and effect change for people everywhere,” the company states on the infinite impact of Shopify Ventures.
What is Venture Capital?
For the unversed, venture capital is an investment model that funds private businesses. In exchange for funds, investors get partial ownership of the company. “Venture capitalists (VCs) are more often firms, such as Kleiner Perkins or Sequoia. But individuals who are VCs are more generally known as ‘angel investors,’ because they often get involved earlier and take a smaller stake,” Shopify explains on its website.
With venture capital, both investors and founders aim to improve technology, products and concepts. The funding helps the project move forward for the company’s overall growth. “As payment for their investment, they typically take an equity, or ownership, stake. While the impression may be that VC funding is pretty typical, in fact, historically, fewer than 1% of companies have landed VC money. It’s the exception, not the rule, according to the Harvard Business Review,” adds Shopify.
Shopify as Investor
In another update, Shopify recently partnered with HCG Fund Management LP to sell loans facilitated by Shopify Capital. The deal between HCG Fund Management and Shopify will help small and micro-online businesses across the US by supporting the democratization of credit access. The partnership is an opportunity for HCG to assist Shopify in its mission to make e-commerce more accessible and simpler for all.
Jose Penabad, Co-Founder and CIO of HCG, believes that the new alliance will helps individuals and small companies perform essential activities for business growth. “We are excited to work with Shopify. Shopify’s loan origination platform perfectly fits HCG’s ecosystem of pioneering companies that facilitate lending activities to individuals and small companies. Because of Shopify’s activity and foresight, many e-commerce companies today have access to credit, an essential ingredient for fostering the growth of small businesses, the engine of the US economy,” he said.
Shopify Capital was initially launched for US merchants in 2016 with later expansions in Canada and the UK in 2020 and 2021 respectively. Last year, Shopify Capital entered the Australian market. “Today, almost 40% of Australian merchants on Shopify sell internationally through features like Shopify Markets, and access to working capital through Shopify Capital now gives merchants greater scope to build their brand both here and internationally,” Shopify said at the time of expansion.
By August 2022, Shopify Capital lent more than $3.8 billion USD in its first three markets. According to the official website, merchants who received funds through Shopify Capital witnessed 36 percent higher sales in the next six months compared to others.
About Shopify Capital
It removes the complexities involved in traditional finance and eases the funding process for merchants. With no lengthy application process and no personal credit checks, Shopify Capital allows small business owners to apply for and pay back through the existing Shopify platform they use to run their online store. Once approved by experts, funds get deposited within two business days.
There are no hidden fees and uncertainty of compounding interest rates. Merchants repay based on a mutually agreed fixed percentage of daily sales. Most importantly, there is no time limitation involved for the repayment — merchants can repay based on their sales, hence payments flex with the business.
