Dauphin’s Prairie Supply Co. gets funding directly from tech giant
Dauphin's Prairie Supply Co. gets funding directly from tech giant
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Hey there, time traveller!
This article was published 29/07/2021 (972 days ago), so information in it may no longer be current.
Despite the dearth of capital investment for Manitoba businesses, one Dauphin-based company is paving the way with success through the trust and support of Canada’s largest publicly traded firm.
Prairie Supply Co. has grown in revenue by over 200 per cent during the pandemic, after receiving three rounds of funding from Ottawa-headquartered giant Shopify Inc.
The small business has been around for almost 11 years in the rural Manitoba location — selling snowboards, skateboards and snacks as a retail store — nestled between Riding Mountain National Park and Duck Mountain Provincial Park.
Owner and manager Dale Jacobs told the Free Press, while his business was one of the earlier converts to e-commerce, he never quite imagined seeing his online sales skyrocket the way they did in 2020 without his partnership with Shopify.
“It’s definitely hard when you’re setting things up. It takes years and years with lots of trial and error, and even still, you don’t have enough funding to leverage your growth,” Jacobs said.
His company had been connected with Shopify as a merchant for a few years, but finding capital wasn’t so easy. “As an entrepreneur, it’s very frustrating when you’re looking around everywhere to raise the sum of money you need to pursue your business targets,” said Jacobs.
“All they want are bottom lines, because you’re only as good as yearly numbers on paper,” he added. “In reality, we know that for small and local businesses, that may not happen so quickly while you’re focusing on development and building infrastructure, because your own personal investment is so heavy that it weighs down on profits.”
So, when bank after bank kept telling Jacobs that his business was too risky to invest in, Shopify did the opposite. “They understood what the entrepreneur process really is, and for me, it was like a breath of fresh air,” he said.
The way the deal worked was that with every round of funding, Shopify used advanced artificial technology from 70 million data points to understand trends within a given merchant’s potential. This eliminated lengthy interviews, applications and reviews of credit scores or financial plans; to provide capital within two to five business days.
Monetarily, the partnership allows Shopify to not take the often unsuccessful route of an angel investor who buys up equity from a local company. Instead, the e-commerce giant purchases future receivables in exchange for the promise to remit that funding amount plus a bit more.
“For example,” a Shopify spokeswoman explained, “we would purchase $10,000 of a merchant’s future receivables in exchange for a merchant to promise to remit $10,900 of their future sales. The $900 is the amount we charge for the financing, and is repaid by a merchant’s daily remittances on days they make sales.”
The spokeswoman told the Free Press what makes the arrangement special is that it’s “giving business owners a worry-free way to secure and repay business funding,” while allowing them to use it on whatever they see fit with their future plans.
Jacobs couldn’t agree more. After all, through the funding, not only was Prairie Supply able to build up on inventory and receive an abundance of sales, it also hired additional employees to market its business on social media channels like Facebook, Instagram and Pinterest.
“And the best part is, you can keep getting more funding the more you pay it back,” said Jacobs, who has received just over $200,000 so far.
‘Shopify has created a game-changer for everyone involved’
Shopify says it’s interested in partnering with other Manitoba businesses, too. As of May, the company has funded merchants in the U.S., Canada, and the U.K. with US$2 billion since launching Shopify Capital.
That’s welcome news because seven out of 15 Canadian industries experienced an overall decline in investment from 2015 to 2019, a new report from the Fraser Institute revealed Thursday. The trend is suggested to have only worsened during the pandemic, which renowned author and senior Fraser fellow Steven Globerman called “troubling.”
“It’s bad news for the economy,” Globerman said, citing how every single industry experienced severe declines in investment; including oil and gas (down 48 per cent), agriculture, forestry and fishing (19 per cent), utilities (19 per cent) and retail trade (11 per cent).
“At the end of the day,” Jacobs said, “running a business isn’t easy. The last thing you want to do is see your own financial objectives get in the way of your growth. By removing these barriers, Shopify has created a game-changer for everyone involved.”
temur.durrani@freepress.mb.ca
Twitter: @temurdur