Shopify helps businesses survive by moving operations online.
Many small businesses were hit hard as local and state governments forced them to close or reduce operations to slow the spread of the coronavirus. Many survived partly because Shopify, an ecommerce software provider, offered a platform to move businesses online. The company provided free trials and tips on how to best adapt to changing consumer shopping patterns and product needs.
Shopify got a boost as the lockdown advanced the adoption of ecommerce by businesses and consumers. Its revenues roughly doubled in the second and third quarters in 2020 compared with the same period in 2019. The Ottawa, Canada-based company has come a long way since 2004 when it began as an online store selling snowboards. Today, it is a cloud-based multichannel platform employing more than 5,000 people. More than 1 million small and midsized businesses in more than 175 countries use the Shopify platform, which provides online retailers with access to services, including marketing, payments, shipping, and customer engagement tools.
As part of its mission, Shopify says it wants to make ecommerce better for everyone. To do so, it seeks to reduce barriers to business ownership by making it easier for anyone to start, run, and enlarge their businesses. It offers tools for businesses to expand and educational resources for current and aspiring entrepreneurs.
As part of its efforts to leverage the power of ecommerce to create a more equitable and sustainable future for everyone, Shopify is focusing on four groups of business owners who face systemic barriers: Indigenous people, youths, newcomers, and social-impact businesses. Based on Algonquin Anishinaabe Nation land, Shopify has vowed to help more Indigenous entrepreneurs’ businesses move online, hire more Indigenous people, and promote Indigenous businesses globally.
To help youths, Shopify became a founding partner in the Black Innovation Fellowship and upGen’s UpstartED program in 2019. It also provided funding and coaching to the ForUSGirls’ Emerging Young Leaders Accelerator, a seven-week entrepreneurship training accelerator for teen girls and young women who live in disadvantaged communities.
To fight poverty, Shopify has teamed up with Operation HOPE, a nonprofit focused on fighting poverty, to offer education and capital to Black entrepreneurs. Shopify committed up to $130 million in resources to support Operation HOPE’s efforts to reduce systemic barriers to entry to entrepreneurship faced by the Black community. Its goal is to create 1 million Black-owned businesses in the United States by 2030.
Fighting Climate Change
Shopify is also devoting substantial resources to fighting climate change. It launched a Sustainability Fund to contribute to a low-carbon future for the planet. Shopify spends $5 million annually on promising, impactful technologies and solutions to fight climate change globally. In its first year, it has invested in 13 companies in nine industries that it believes have the potential to reverse climate change. These are companies such as Planetary Hydrogen, which developed new technology to produce hydrogen, a green fuel; Pachama, which runs a marketplace that sells carbon offsets verified by artificial intelligence technology; and Shop, a shopping-assistant app developed internally by Shopify that also allows consumers to see and offset the carbon impact of their online purchases.1
Shopify has backed this up with a carbon-negative commitment to invest at least $1 million a year to remove carbon from the air. In 2020, when shoppers rang up a record $5.1 billion in sales in the stores of Shopify merchants on Black Friday and Cyber Monday—up 76 percent from 2019—Shopify purchased offsets of nearly 62,000 tons of carbon emissions from the proceeds from its deliveries that weekend.
Shopify’s efforts have brought measurable results. Its purchase of carbon offsets has kept 22,127 tons of carbon out of the air from 2004 to 2018, according to the company’s sustainability report.
Sustainable Development Goals
The Sands Capital six investment criteria tend to lead us to businesses that are innovators or vital facilitators of change in industries undergoing significant transformation. Shopify is one of many portfolio businesses that create impact by addressing at least one major social or environmental challenge identified by the United Nations Sustainable Development Goals (SDGs). Shopify businesses directly address SDG 8, Decent Work and Economic Growth; and its commitment to entrepreneurship education addresses SDG 4, Quality Education; and SDG 10, Reduced Inequalities. Its environmental impacts fall under SDG 7, Clean Energy; and SDG 12, Responsible Consumption and Production.
1 Planetary Hydrogen and Pachama are not holdings in any Sands Capital strategies.
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