SAN FRANCISCO, Jan 29 (Reuters) - U.S. home improvement website, Houzz, has raised $35 million from venture capital firms, including Silicon Valley’s New Enterprise Associates and GGV Capital, and plans to hire more staff and expand into Europe and Australia.
The company, which helps homeowners with large renovation projects, also said it would begin running advertising for architects and contractors.
Since 2010, total U.S. spending on renovations has eclipsed spending on new single-family home construction almost every month - as opposed to the pre-2007 years, when the building boom churned out new homes, according to the National Association of Home Builders.
Alfred Lin, a partner at Sequoia Capital, who backed Houzz early on, said the home improvement market is now worth as much $300 billion.
Houzz’s financing is a vote of confidence at a time when many Silicon Valley investors are questioning the potential profitability of e-commerce and social media startups.
Daily deals site Groupon has seen its stock sink almost 75 percent since its public share listing as it struggles to acquire new merchants, and privately held online retailers Gilt Groupe Inc and Beachmint.com have laid off staff.
Houzz’s backers argue its strategy will pay off because it caters to homeowners carrying out big-ticket projects - an audience that contractors are willing to pay to reach.
Founded in 2009, the company does not disclose its valuation or say whether it is profitable, but its investors say ads could become a hefty revenue stream because the majority of renovation projects are worth more than $30,000.
“We remove the barriers between homeowners and good design and great professionals,” Houzz chief executive Adi Tatarko said.
“The process doesn’t have to be so hard. It’s no longer just word-of-mouth and a referral from your realtors or your neighbors.”
Tatarko, who predicts that the remodeling market will hit double-digit growth this year, said she wanted to also ensure that her service appealed to a broad range of customers.
“It’s no longer just custom, high-end projects, it’s across the board,” Tatarko said. “No matter who it is, people are always passionate about their homes.”