Houzz Raising Funding at Valuation Above $5 Billion
This article first appeared in Term Sheet, Fortune’s newsletter on deals and dealmakers. Sign up here.
Houzz, an online platform for home remodeling and design services, is in the market raising a large new round of venture funding that could value the company at more than $5 billion, according to several sources familiar with the situation. The talks are early, but sources say the company could raise as much as $500 million. Asked to comment, a Houzz representative wrote, “It’s not true.”
Founded in 2009 by Adi Tatarko and Alon Cohen, Houzz has raised $213 million in funding to date. The Palo Alto-based company’s latest round, a $165 million Series D in late 2014 led by Sequoia Capital, valued it at $2.3 billion.
Houzz is notable for a couple of reasons: It’s a marketplace and e-commerce site that is both highly community-focused and content-focused. (Some say it combines Pinterest, Yelp, Amazon, and Taskrabbit.) It has three revenue streams-advertising, commissions from its local services marketplace, and fees from its listings business. It claims 40 million monthly active users. And it’s one of the only startups worth $1 billion or more with a female co-founder.
This deal may mark the beginning of a bifurcation of the billion-dollar startup club. Many so-called “unicorns” raised huge cash reserves in late 2014 and early 2015 on fears that the go-go market for funding might dry up. Now, two to three years later, many of them face the decision to raise more money or suck it up and go public. Houzz is clearly choosing the former.