Shopify’s Recent Fundraising: Must-Knows



Roughly $2.0 billion in cash

Last month, Shopify (SHOP) raised about $400 million through the sale of 2.6 million new shares. The company said it intended to use the proceeds from the sale of shares to strengthen its balance sheet, which should provide more flexibility to fund its growth strategy. Shopify exited the third quarter of 2018, the most recent reported period, with $1.6 billion in cash. The sale of new shares placed the company on track to close 2018 with $2.0 billion in cash.

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Making cash advances to merchants

Shopify has been pursuing growth by creating new products, acquiring other companies, launching in more countries, and extending credit to its merchant clients to help them grow their businesses.

In the third quarter of 2018, Shopify extended $76.4 million in cash advances to its merchant clients, raising its total cash advances to $375 million since 2016. Extending cash advances or loans to merchants has become a popular strategy for ecommerce companies to try to drive growth. Amazon (AMZN) has extended more than $3.0 billion in loans to tens of thousands of sellers on its marketplace. Last year, eBay (EBAY) tapped Square (SQ) to extend small loans to its sellers. PayPal (PYPL) also makes small business loans and has written more than $6.0 billion in such loans since 2013.

Revenue jumped 58%

Shopify’s revenue rose 58% year-over-year to $270 million in the third quarter of 2018. It guided for fourth-quarter revenue in the range of $315 million–$325 million. Shopify is expected to report its fourth-quarter results on January 24.


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