Along with the partnership announcement comes a strategic investment. The Ottawa-based e-commerce giant appears to have invested nearly $100 million USD in Klaviyo as part of the deal, according to a document Klaviyo filed with the United States (US) Securities and Exchange Commission (SEC) on August 2—when Klaviyo and Shopify announced the strategic partnership and investment.
The SEC filing indicates that Klaviyo has sold an equity stake in itself worth $100 million to a single buyer that is not named. Both companies declined to confirm that Shopify is the investor in question.
The Klaviyo deal marks Shopify’s second strategic investment in recent weeks.
Klaviyo has been part of the Shopify ecosystem since 2017, and Klaviyo CEO Andrew Bialecki told TechCrunch that the two companies have already been working closely together for years. With this partnership, Klaviyo will now serve as the recommended email solution partner for Shopify Plus and receive early access to new Shopify development features.
“Klaviyo has become invaluable to hundreds of thousands of merchants to help them better understand their customers and engage them in highly personalized ways across so many touchpoints,” said Shopify President Harley Finkelstein. “Klaviyo’s success has been astounding, and we’re excited to take this next step in our already robust partnership to make it even easier for Shopify merchants to grow their businesses.”
Klaviyo, which was founded in 2012, integrates with existing platforms to automate sending emails and texts to customers. Retailers can use Klaviyo’s platform to send messages regarding abandoned carts, product recommendations, among other topics. Klaviyo currently has over 100,000 paid users, and most recently raised $320 million USD in Series D financing at a $9.5 billion valuation in May 2021. Bialecki told TechCrunch that Shopify has been “key” to Klaviyo’s growth to date.
The Klaviyo deal follows Shopify’s on-again, off-again relationship with Mailchimp, another marketing automation provider. Shopify previously had an integration with Mailchimp, which was acquired by Intuit last year for $12 billion USD.
However, this integration was removed from Shopify’s marketplace in 2019 following a request from Mailchimp, which cited privacy concerns associated with the e-commerce firm’s updated terms of service.
Later that year, Shopify launched its own email product in a move that put the firm in direct competition with its old partner. Since then, Shopify and Mailchimp appear to have patched things up, as the two companies rolled out a direct integration in late 2021.
The Klaviyo funding and partnership marks Shopify’s second strategic investment in recent weeks, after the Ottawa e-commerce firm put some capital into Single—a Nashville-based, Solana blockchain NFT app for Shopify merchants.
The Klaviyo and Single deals represent the latest in a long line of strategic investments and acquistions that Shopify has made in tech startups that serve its merchant ecosystem.
Shopify has previously invested in Vancouver bookkeeping firm Bench, Israel-based e-commerce marketing company Yotpo, US customer relationship software startup Loop. Shopify also holds sizeable stakes in American payment processing firm Stripe and buy now, pay later company Affirm.
Last month, Shopify completed its largest acquisition to date, purchasing San Francisco-based Deliverr for $1.2 billion to expand its in-house fulfillment network, as it looks to make next-day and two-day delivery available to Shopify merchant customers and better compete with Amazon.
During the first half of 2022, Shopify’s revenue growth has continued to slow amid shifting e-commerce conditions, as the forces that drove the rise of online shopping during the pandemic have begun to wane and demand for in-person shopping has rebounded. In Q2, Shopify pulled in $1.3 billion USD—a 16 percent year-over-year increase—coupled with a net loss of $1.2 billion.
These results came a day after Shopify laid off approximately 1,000 employees, or 10 percent of its global workforce. Shopify co-founder and CEO Tobi Lütke attributed the move to misplaced bet on where the future of e-commerce spending was going amid COVID-19.
Feature image courtesy Shopify.