Home Improvement Start-Up Houzz Now Valued at $4 Billion

(The Washington Post) -

Its website has more than 20,000 sellers that offer more than nine million products. Its customers are able to connect with home improvement professionals, hobbyists and contractors. It’s a start-up called Houzz and with a $400 million new round of financing announced late last week, the company is now valued at more than $4 billion.

Financing your company is not just about a good business plan, sound management and strong product ideas. It’s also about timing. And the home improvement market is booming, particularly online. According to this report from Bloomberg, consumers bought $27 billion worth of furniture and related items for the home online and the number is projected to more than double by 2020.

Houzz is in the middle of all that. The company not only sells millions of products for the home — from bathroom sinks to pillows — but also connects visitors with home improvement specialists like door dealers, interior designers and window cleaners. Houzz then lets visitors upload photos of their home and then swap out images of furniture, appliances and other improvements to see how those products would look inside their own space. The site also has stories and multiple discussion groups where visitors can post questions for each other and experts.

Houzz has big plans with its newly raised capital. The company wants to expand the localized versions of its site from its existing 14 countries and plans to further invest in its augmented reality interface to help users visualize bigger ticket items in their homes . . . which it hopes will mean larger and more profitable sales.

“Houzz is basically a niche Pinterest for your future home,” Matthew Lynley writes in Techcrunch. “The difference is the kinds of products that Houzz can target and sell can be higher-value, meaning the people that actually buy products through Houzz are probably more valuable than the typical customer you might find on a larger platform ….”

Houzz isn’t the only company capitalizing on the growth of the online home improvement marketplace. Amazon is showing interest too, according to Bloomberg, and Lynley thinks that Pinterest has “the best shot” to generate interest from advertisers because of its large user community.