A group of top Silicon Valley investors and veteran tech executives are putting more cash behind Fernish, a Los Angeles-based startup aiming to reinvent how people buy furniture for their homes.
Khosla Ventures led a $15 million Series A round announced Tuesday, which included participation from Techstars Investments, Tapas Capital, RET Ventures, and individuals such as HotelTonight co-founder Jared Simon, Zillow co-founder Spencer Rascoff, former Invitation Homes CEO Fred Tuomi, and Applied Semantics founding team member Eytan Elbaz. Amazon Worldwide Consumer CEO Jeff Wilke, who invested in a $30 million round two years ago, put in more cash, as did Intuit co-founder Scott Cook.
The all-star cast of investors — Khosla was an early backer of Square, DoorDash, and others — is betting that more people will use the Fernish model to furnish their homes. The company is geared toward young customers who want high-end furniture but need to swap it out often because they are on the move frequently as they start their careers.
Fernish customers pay a monthly fee that varies based on subscription length and items. They can choose multiple pieces as part of a package created by an interior designer or opt for single items.
Accent chairs range from $19 to $46 a month; sofas go as cheap as $26 as month and as high as $63. The furniture comes in new or like-new condition, and is sourced from suppliers such as Crate&Barrel, CB2, and Floyd.
If customers want to buy the pieces, they have that option when the subscription term is done. Subscription payments count toward the sale price, or customers can swap the furniture out for other pieces once their contract runs out. There is a $99 monthly minimum and subscriptions last three to 12 months.
Founded in 2017, Fernish is still unprofitable but grew revenue by more than 10X last year. Fernish co-founder Lucas Dickey said the company’s valuation has increased since its last financing.
Fernish continues to add customers despite the ongoing pandemic. The company saw a 300% increase in home office orders since the start of the COVID-19 outbreak as people looked to fill their at-home workspaces, while many brick-and-mortar stores temporarily closed down or ran out of business.
E-commerce giant Wayfair, a leading online furniture store, also saw growth during the first quarter, with orders delivered up 21% year-over-year and revenue up nearly 20%.
Fernish responded to the health crisis by enforcing strict safety guidelines, thoroughly cleaning its furniture, vehicles, and warehouses. It began offering no-contact delivery as an option, and required its employees to wear PPE equipment when entering a customer’s home. The company is also donating $5 of every order to local charities for COVID-19-related relief efforts.
Raising capital amid a global pandemic is a testament to the company’s progress thus far and potential for growth, co-founders Lucas Dickey and Michael Barlow said in an interview with GeekWire.
“We take all the pain points associated with buying, owning, moving, selling, storing, and ultimately disposing of furniture, and replace that with a highly convenient service-oriented solution,” Barlow said.
Fernish will use the new funding to expand beyond Los Angeles and Seattle, and hire more employees. It did not lay off workers in recent months, unlike hundreds of other tech startups. The cash will also help the company build out its in-house tech platform that “plays furniture Tetris,” as Barlow described.
Barlow estimates the U.S. furniture market at more than $100 billion. Wayfair, Williams-Sonoma, Walmart, and others are vying to take a chunk of the online furniture industry. It’s a unique category, given the complexities around delivering furniture compared to other goods sold on the internet. Amazon also sells furniture and has released various online tools to help shoppers buy couches and other furnishings.
Speaking of Amazon — the company’s DNA runs deep at Fernish. Dickey worked at the Seattle giant for nearly four years; it’s where he originally met Wilke, a top Amazon exec who learned about Fernish through Kristin Smith, a former colleague of Dickey who invested in the startup before becoming its chief operating officer last year.
Barlow and Dickey met at Atom Tickets, a Los Angeles startup founded by a former Amazonian.
So it’s no surprise that Amazon’s leadership principles (bias for action, disagree and commit, etc.) and business strategies (writing “future” press releases to help plan big product launches) are closely followed at Fernish.
“We have that Day 1 mentality,” Dickey said. “As much as you’d think we would be celebrating this Series A raise, we barely even stopped to recognize the money. In our minds it is Day 1 again.”