Convictional to shut down, return investor money, after AI-era pivot falls short

Kitchener-Waterloo-based technology company Convictional is closing up shop at the end of August after failing to generate enough traction as a corporate collaboration platform.

The startup announced in a blog post last week that it will permanently shut down on Aug. 27. This comes after Convictional divested from its original e-commerce business last year and refocused on building an alternative to Slack for the AI era. 

“Past a certain point, it’s not a great use of investor funds chasing product-market fit somewhere where customers’ behaviour suggests they are [already] satisfied.”

The company’s results since then convinced co-founder and CEO Roger Kirkness to pull the plug. “Past a certain point, it’s not a great use of investor funds chasing product-market fit somewhere where customers’ behaviour suggests they are satisfied with the status quo,” Kirkness wrote in the post.

“What we wanted to build, people don’t want, and what people want in this area, they are building themselves (or can’t be sold profitably),” Kirkness later told BetaKit over email.

Convictional, which still has “several years” worth of runway left, plans to return its remaining cash—a little less than half of the nearly $49 million USD ($68 million CAD) in venture capital funding that the company had raised to date—to its investors, which include Y Combinator (YC)’s growth fund and Kitchener-Waterloo’s Garage Capital, among others.

Kirkness first launched Convictional in late 2017 with another ex-Shopify employee, former Convictional president Chris Grouchy, to better connect retailers with their suppliers. The initially Toronto-based startup joined YC in 2019. Over time, it evolved into a tool for enabling dropship partnerships.

That part of the company’s business, which it branded Modern Dropship, grew to 3,000 customers, $2 million USD in net annualized revenue, and $83 million in gross merchandise volume (GMV) before Convictional divested in early 2025 after the startup’s leadership and investors identified limited growth potential.

RELATED: Convictional secures $50.7 million CAD, announces UK expansion

While he and Grouchy explored pivots within retail e-commerce, Kirkness said that “nothing felt exciting, and the rest of what was growing it seemed like Shopify was already working on.” 

Grouchy left Convictional in 2024, around the same time that the company began discussions with Modern Dropship’s eventual acquirer, California-based competitor Carro.

“We spent years on the hardest problem in B2B commerce: getting retailers and their suppliers to say yes to the same infra,” Grouchy told BetaKit over email. “That software still runs meaningful volume today.”

While Kirkness did not disclose the financial terms of the Modern Dropship divestiture, he acknowledged Convictional “lost a significant amount” of what it spent to build and sell the platform, but said its software is still around today and helps Carro power much more in GMV. Two of Convictional’s employees joined Carro as part of that deal.

The rest of the company refocused around a new idea. “Convictional 2.0 was about trying to productize the way we ran the first business,” Kirkness said, claiming that the startup’s operating handbook had already been adopted by other companies.

“I think the right but hard thing was to keep our word, return cash, and let the team move on somewhere growing.”

Source: Read the original article on betakit.com