When This Startup’s ‘Shark Tank’ Deal Fell Through, Tinder’s CEO Pounced
Last May, Tinder co-founder Sean Rad was watching Shark Tank, the popular ABC show in which entrepreneurs pitch high-profile investors including Mark Cuban and Barbara Corcoran. He was struck by one of the featured startups, a millennial-focused online interior design and furniture delivery company fronted by three women who had just graduated from college.
Although their business model was criticized by the Sharks — investor Kevin O’Leary said the model wasn’t scalable — the trio secured a deal with Corcoran: $100,000 for 33% of the business.
“I felt they didn’t raise enough,” says Rad. “I was hoping that the deal would fall through afterwards; I didn’t feel it was the most favorable terms.” After the show, he reached out to one of the co-founders, CEO Beatrice Fischel-Bock, via Facebook (FB) (the two shared mutual friends on the social network).
The deal eventually did fall through — the co-founders decided to walk when they realized Corcoran wouldn’t be directly involved in growing the business, Fischel-Bock told Philadelphia Magazine — and Rad was able to step in. The company renamed itself Homee, and quietly raised a seed funding from angel investors including Rad, Ben Silverman and Scooter Braun. Yesterday, just over a year after the Shark Tank appearance, the company announced a $5 million Series A round, led by Peter Thiel’s Founders Fund, which brings brings its funding total to $7.2 million
It’s a crazy trajectory. And as with most crazy trajectories, coincidence plays a starring role. Rad says he doesn’t usually comb Shark Tank for investment ideas: “It was probably the fifth episode I saw.” His schedule doesn’t typically leave room for much TV, but “he had more time on his hands than he does now,” says Fischel-Bock. (Rad was replaced as Tinder’s CEO a month before the episode aired; he was reinstated in August.)
Ever since his initial Facebook message, Rad has served as a mentor to the company, Fischel-Bock says, connecting the startup to investors and attending weekly meetings.
Part of these weekly meetings likely involve discussion about how Homee can outshine competitors.
The online interior design market is becoming increasingly crowded, as startups including Laurel & Wolf, Havenly and Homepolish try to disrupt the industry by connecting users with professional designers online. But while these companies may share its DNA, there’s an important difference, says Fischel-Bock: Homee isn’t an interior design firm. In lieu of customized floor plans the company’s app, which uses a combination of bot technology and flesh-and-blood designers, puts together a list of recommended products for a particular room or space, and then helps facilitate ordering and delivery. (It makes money when users purchase furniture on the app.) Its target audience is very specific: urban millennial users who are ready to upgrade from IKEA-style furniture. “The sweet spot is 27 or 28,” Fischel-Bock says. “You have a job, you have money, you don’t necessarily want to work with a designer but you would appreciate a designer’s say.”
The company says it will use the bulk of the $5 million to improve its underlying technology and scale. The app came out of beta yesterday.