The Top 100 Shopify Plus App Fundraising Report

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TLDR;

- The 8-year-old “King of car washes”

- How much have the Top 100 Raised and Created through exits?

LBAB Community:

I got into entrepreneurship at 8 years old when I started washing cars, so I could get the latest Game Boy Original games. My dad set me up with a bucket, sponge, suds, and a hose. I got paid $5 to wash/clean cars + $3 to wax. 

It is a Top 5 most valuable lesson I learned as a kid. The work was unenjoyable, fairly easy, required attention to detail, and very process-oriented. I made money outside of my regular allowance, and it gave me the freedom to buy what I wanted instead of asking my parents for things.

What I learned:

• Making trade-offs between what I wanted vs. the effort required to afford them.

• The value of money + it’s only a means to an end. 

• How to break down tasks into repeatable processes.

• Managing a P&L (the Suds & Sponge subsidy eventually dried up).

• Seasonal bizs suck. Washing cars outside in NY winter 🥶🥶🥶.

What started as washing my parents’ cars every 4-6 weeks extended to Family, neighbors, and friends. It never got big. Maybe 4-5 families in total, but I learned how to keep my current clients happy, while trying to find new ones.

I’ll never forget my Uncle canceling because it was going to rain the next day: 1 of my first lessons in Objection handling and how to understand the impact of external factors on your income. Regardless of your work/talent.

I wasn’t the best car washer in the world, but at the below market prices, I didn’t need to be. This was actually the most harmful lesson I wish I hadn’t learned during this process. And it took me years of building bizs to unlearn. 

I looked for ways to increase my prices over the years, but I never found a way to dig myself out of the hole I started from. The entire venture started from a place of weakness. I was the discount, race-to-the-bottom option that never had the understanding or positioning to justify price increases. 

It’s a lesson we consistently (and I believe incorrectly) teach kids as they enter the workforce:

1. Lack of the confidence to charge more.

2. Have the ingrained belief that newer/more inexperienced products/services charge less.

To clarify, my parents did the right thing (Who would be crazy enough to pay a completely inexperienced kid above market prices to unprofessionally clean their car?). And to be clear, the overwhelming majority of the income I made from this endeavor was from my parents.

But I wish they had used our house as more of an incubator for me to better understand the market. I’m not saying I needed to run a SWOT analysis, but give me the time to develop my skills. Figure out a way to be unique, then I can introduce my “offering” to the market. At hopefully more competitive prices.

I never learned how to make more $ other than by increasing my prices, even as I got older (and wanted to make more), and even as professional car washes got more expensive (and I continued to undercut them). Which is very much the way that an employee thinks about making more money. Not an entrepreneur.

If I can stand on my parents’ shoulders and adjust this playbook for my kids. I’d take the Apprenticeship over Internship model.

I’d pay my kids a nominal amount, where I’d save significantly vs. market, to teach them the lessons and the required skills. But the major change I would make is sitting them down and showing them what I as a customer would get from other experiences.

I’d explain to them that I could be spending $X for A, B, C value at their competitor to challenge them to think about what they can do differently to set themselves apart. How could they charge others more, and what could they do to improve their offering?

I was never meant to be the king of car washes, but I definitely never honestly pursued it, because I never saw the value in it. Not only because the work wasn’t interesting to me, but because I never saw a clear path to making real money except by always undercutting the local car wash. 

All right. Enough about me. Let’s get into what everyone is here for: 

Who’s raised the most money? Exited for the most money? What is going on in the crazy game of fundraising in the Shopify ecosystem.

Let’s Analyze the Top 100 Apps

Today’s newsletter is going to be a little different as we’re bringing you another report. We spent the past 3 months analyzing the bizs behind the Top 100 most popular Shopify Apps.

Ever wonder how much all the Shopify Apps are sitting on? Or how many

• How much did they raise?

• Who exited and for how much?

The Water Cooler Insights:

1. 25% have exited for a total of $63.7B!!

2. 9 / Top 20 Plus Apps have exited, leading to 98% of the total $63.7B disclosed exit value.

3. 59% / Top 100 were funded, raising $17.8B.

4. 5 / Top 20 apps are bootstrapped.

5. Afterpay had the largest exit overall, for $29B (46% of total exit value).

6. Mailchimp is the most successful bootstrapper ($12B exit).

Want to dig into the data yourself? Here’s the link to the raw data.

Breaking down the Top 20 Apps:

This is a truly winner-take-most market. Most value and money is aggregated at the top of the pyramid.

The Top 20 Plus Apps captured:

• 51.6% of total funding

• 97% of total exit value (Disclosed)

• 2 orgs (Afterpay + Mailchimp) dominate -> $41B (64.4%) in combined Ent (Enterprise) value.

• BNPL dominated this category. 4 BNPL orgs (Affirm, Klarna, Afterpay, Settle) raised 57% of the TOTAL funding).

There are now 10k apps in the Shopify App store. Let that sink in for a moment. The Ent value of 0.07% of the Shopify apps is more than the individual GDPs of Iceland, Bolivia, and Latvia.

Do I Fundraise or Bootstrap?

We’ll leave the personal preferences to you. But looking at the data…

• 15 VC-Backed bizs exited for a total of $51.5B vs. Bootstrappers at $12.2B.*

  • *This is a limitation of the analysis, as we only have Exit Values for 4/10 exited Bootstrappers.

• $43.9B in Ent value (net of the $7.9B raised) was created by the 15 VC-backed bizs that exited.

• VC-Backed bizs still generated 2.8x the amount of total Net $ as Bootstrappers.

  • Investors will have taken home a huge chunk of the $43.9B in Exit value vs. the Bootstrappers, who retained 100% of their Exits.

The Shopify Plus App space, like many other industries, is filled with plenty of apps that have gone either way. But the old adage that Big Bizs require a lot of capital holds true.

The False Start & Golden F(o)unding Era

Shopify App Store launches in 2009. The Goldrush begins.

• 58% / Top 100 founded from 2012 - 2017 (raised $6.3B).

• 2011 - 2012 was the Shopify ecosystem false start. A massive surge in 2012 collapsed in 2013.

• Total founding year range of all Apps: 1998 - 2022 (25yr spread).

Diving into the OG Vintage (2012):

Call it the Shopify OG Vintage or the “Greatest Generation,” but this class includes Klaviyo, Smile.io, LoyaltyLion, Affirm, Justuno, Bold Upsell, Aftership, and Algolia.

• $2.9B raised among them

• 4 exits, 2 IPOs

Some of these apps have been acquired, forgotten, or have moved on from the space, but all were first in their category or represented a core feature shift that built the foundation of the eCom stack we now sit on.

The ones that survived dominate the space. The craziest part to think about is that these are the bizs that took a bet when Shopify was sub-100k brands overall. Now, we live in a paradigm where 100k Shopify Plus stores in the next decade is a very possible outcome.

The Full Report Is Bigger, Badder, and BNPL-er.

In the Full Report, learn how…

1. BNPLs ran through the space like a Zombie-horde

2. Klarna and Mailchimp are absolute outliers

3. Afterpay might have the most insane story of any app out there

4. The entire space might be imploding in competition

5. We see the future shaping up in this crazy space

Check out the full report here.

Final Thought:

The Shopify Avalanche (powered by Shopify Plus) is sweeping through eCommerce on a Taylor Swiftian level.

And with all this success, the 1 trend the data keeps showing is that we are still in the early innings. 25 / Top 100 apps have exited, for a total of $63.7B. 

75% HAVEN’T.

1. What happens in another 5 - 10 years?

2. How big is Shopify Plus when Shopify passes 3m stores, or 10m?

3. How many more Apps will exit? And for how much?

4. How large can this ecosystem become?

The bigger Shopify becomes, the bigger + greater number of use cases need to be solved for more Merchants. We old heads complain about there being 10k Shopify Apps today. We also complained about the 5k apps back in 2019.

What does this mean for Shopify itself?

If (c’mon, more realistically WHEN) Shopify hits a $1T market cap, we’ll be looking at a new evolution of what eCommerce means and what type of ecosystem exists to support it.

Takeaways:

There are now 10k apps in the Shopify ecosystem. For the Top 100, there’s billions more in exit potential.

1. 25% of the Top 100 Shopify Plus apps have exited for $63B. There’s so much more room for growth.

2. While Fundraising has many tradeoffs. The bizs that did hit a significantly higher exit value than Bootstrappers.

3. There’s so much more growth left in the Shopify ecosystem. Don’t count our chickens just yet.