The Wall Street Journal: Home-remodel site Houzz in talks to raise more funding

By Evelyn M. Rusli and Douglas MacMillan

Home-remodeling site Houzz is in talks with investors to raise a round of funding that would value the company at more than $2 billion, according to people familiar with the deal.

The Palo Alto, Calif., startup has so far raised $150 million but may take on additional funding, said one of these people. Early shareholders in Houzz may also sell some shares in the round, the people familiar with the deal said.

The sizable valuation investors are willing to place on Houzz reflects the sites growing influence in home remodeling, a market the Home Improvement Research Institute predicts will top $300 billion this year.

It also reflects lofty valuations for several consumer Internet companies, despite concerns that these values are higher than business fundamentals warrant. Airbnb, the room-rental marketplace, was recently valued at $10 billion, while Uber, the on-demand car service, has talked to investors eager to value the company at $17 billion, people with knowledge of the matter have said.

A spokeswoman for Houzz declined to comment.

Houzz is part marketplace, part social-network for people interested in home design. Users can share photos of home-improvement projects, trade tips and get recommendations on local contractors.

The site has 16 million monthly visitors--a modest number compared with other Web startups valued at more than $1 billion. But visitors to Houzz are a potentially lucrative group, with 90% owning a home, 74% planning to decorate their homes in the next two years and 9% building a new house, according to the companys website.

Houzz would be worth less than half of Pinterest, the graphical online tool for scrapbooking that is also commonly used to plan home improvements. Pinterest has raised $764 million and was valued at $5 billion in a funding round last month.

Pinterest has more users--55 million in April, according to comScore. But Houzz began generating revenue three years ago, while Pinterest is just starting to sell ads on its site.

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The Wall Street Journal: Home-remodel site Houzz in talks to raise more funding