A flexible, unconventional strategy 

Following its decision to support a wide range of technologies at various stages of commercial maturity, Shopify chose to adopt a flexible approach to its purchase agreements. They reasoned that collaborating with companies and developers to remove barriers to market uptake, as opposed to pursuing traditional buyer-seller relationships, was the best means of maximising the impact of the fund’s US$5 million annual commitment.

The flexible approach has been demonstrated in various ways. Shopify often pays a premium price for carbon removals as an early adopter of high-quality solutions to companies across all business stages, so long as the recipient can convince them that the revenue would enable them to reach the next stage of development. This way, Shopify’s purchases support projects to fund research, build pilot plants, purchase equipment, and establish monitoring and verification standards. This approach was developed after Shopify realised that there were not yet enough commercially viable solutions on which to spend the entire US$5 million per year, and that it was essential to support companies at all stages of technological readiness to de-risk their processes and get closer to commercialisation.

From companies still seeking seed and Series A funding, whose solutions were often not yet commercially available, Shopify chose to pre-pay for carbon removals, reserving a small “hold-back” to be released upon successful delivery. This allowed the developers to concentrate on first demonstrating proof of concept, optimising their operations and equipment, and establishing MRV procedures. Recognising that these early stages can be unpredictable, Shopify accepted the associated risk and did not require refunds on the prepayment in case of failure to deliver. These prepayments represented an essential, sometimes unique revenue stream for the companies.