The archive · Consumer Apps · Financial decision · 2009–2017
Houzz confirms it is raising $400M at ~$4B to push remodeling into visual commerce
In June 2017 Houzz said it was raising $400M at a ~$4B valuation, betting deep-learning photo search and AR can turn remodeling into commerce.
Houzz
What the business is
Houzz is a home-remodeling platform where users browse photos and tools for renovation and decoration, find furniture and fixtures, and connect with local professionals and service providers; revenue came mainly from paid listings sold to those professionals, while Houzz pushed into direct product commerce with deep-learning and AR features.
Starting capital：More than $200M had been raised before 2017 from investors including Sequoia, New Enterprise Associates and GGV Capital; the new $400M was coming at a valuation reports put around $4B.
How it started
Houzz was founded in 2009 as a platform to help people renovate and remodel their homes and to find furniture and fixtures. By 2017 the company said it had users in markets including the US, UK, Australia, France, Germany, Russia, Japan, Italy, Spain, Sweden and Denmark, and its main revenue came from paid listings for local home professionals and service providers.
What happened
From 2016 the company pushed from professional leads toward product transactions: in fall 2016 it introduced a deep-learning tool that analyzes home photos and lets users search for and buy comparable products from the page, and in May 2017 it added an AR mode to its iOS apps to preview furniture in a room. On 2017-06-09 it confirmed it was raising $400M at a valuation multiple reports put around $4B, a round Recode reported as led by Iconiq, on top of more than $200M from Sequoia, NEA, GGV and others.
No ending yet — it is still running.
Background
Houzz is a home-remodeling platform: people browse photos and tools for renovation and decoration, find furniture and fixtures, and connect with local professionals. Founded in 2009, by 2017 it said it had users in markets including the US, UK, Australia, France, Germany, Russia, Japan, Italy, Spain, Sweden and Denmark, and its main revenue came from paid listings sold to local home professionals and service providers.
In June 2017 the company confirmed it was raising $400M at a valuation multiple reports pegged at about $4B, on top of more than $200M from investors including Sequoia, New Enterprise Associates and GGV. Recode reported the round as led by Iconiq. The financing bet on the next revenue layer: moving beyond professional listings into product commerce.
The article's evidence for that move is product-level: in fall 2016 Houzz introduced a deep-learning tool that analyzes home photos and lets users buy comparable products from the page, and in May 2017 it added AR to its iOS app so shoppers can preview furniture in a room. The round was still being raised when the piece ran, so this entry records the announcement rather than an outcome.
What has to be true
- Home renovation is a high-value, photo-driven purchase with long planning windows, which suits a visual search product better than a social feed.
- Paid listings gave Houzz revenue without owning the transaction; direct commerce was the natural next layer because the same audience was already researching products in its photos.
- Deep-learning search and AR attack the core furniture-buying friction, imagining a piece in your own room, before the category's offline stores solved it at scale.
- Raising at ~$4B on top of $200M+ told the market that investors believed the audience and its image data could carry a second business beyond leads.
What can be applied
A lead-selling marketplace must eventually own the product transaction; Houzz's round bet that visual search and AR could make that leap.
Aftermath
As of 2017-06-09 the $400M round was still being raised; TechCrunch reported the company's confirmation and Recode's reporting of an Iconiq-led round, and the article lists no completion date or later milestones. Houzz was live with users across the 11 named markets, with revenue still leaning on paid professional listings while the deep-learning and AR shopping features were new. This entry therefore stops at the announcement.
Sources
spotted an error? The archive wants to know.
Your turn
You just read one. Describe what you are building, and see who is betting on the same thing.
Free account · 3 free questions · no card