Yesterday Shopify went public on both the Toronto (SH) and New York Stock Exchanges (SHOP).
For those of you who aren’t familiar with Shopify, they are a Canadian company that provides e-commerce solutions to small and medium sized businesses. I’ve been a paying customer of Shopify many times before and they offer great products and services.
But this isn’t an investment blog, so what’s the big deal?
Well, the big deal is that Shopify – which was started in Ottawa – raised over $120 million of venture capital funding, went public (raising another $131 million), and now sits with a market cap close to $2 billion dollars. And that is a great thing for not only the founders and employees of Shopify, but also for the larger Canadian tech ecosystem.
Yesterday my friend Evgeny (of 500px) tweeted this out:
My big hope is that @Shopify IPO will produce Canadian version of PayPal mafia and the community will benefit from the next wave of leaders.— Evgeny Tchebotarev (@tchebotarev)
What he’s getting at it is that when a successful company goes public it generates a tremendous amount of wealth for a lot of people (the founders, employees, investors, and so on). And invariably many of those people are going to recycle their capital back into the local economy by starting new companies and/or investing in other startups.
But this isn’t some sort of trickle down economic theory. Startup ecosystems just seem to operate very much in this way. There’s almost a natural cycle: start or join young startup, exit company (sale or IPO), make lots of money, become angel investor in and mentor for new startups. And since this cycle compounds, it’s probably the most important prerequisite for a thriving tech ecosystem.
So while this IPO has been no doubt a great thing for Shopify, let’s not ignore what a “Shopify Mafia” could mean for Canadian tech.
Image: Shopify Toronto via Officelovin