Houzz acquires IvyMark to expand into services for designers

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Houzz, the platform now valued at $4 billion where people plan and help find people to complete home design projects, has made an acquisition to expand how it works with one of its most important groups of customers, interior designers. The company is acquiring IvyMark, which offers a set of business management tools and a community platform for interior designers and home design firms.

The financial terms of the deal have not been disclosed, but sources close to the matter tell us Houzz is paying between $30 million and $40 million for the startup.

This is a strong exit for IvyMark (formerly known as Ivy), which had raised just under $3 million from Israeli VC Pitango, Facebook’s David Marcus and others.

IvyMark’s designer customers primarily are based in the U.S., but the company was founded in Tel Aviv and as it happens its offices are right around the corner from Houzz’s R&D offices in the city, Houzz’s co-founder and president Alon Cohen said in an interview. The team based in Israel will continue to work there, and those in California will move over to Houzz’s offices in Palo Alto, Cohen said.

The idea for Houzz will be to expand its touchpoints with interior designers and their related firms, to provide more services for them in addition to providing them with inbound business. Houzz already has some 200,000 designers using its platform globally, so this makes sense as it looks to add more paid services around its freemium model. Notably, IvyMark has no free usage tier.

Cofounded by Alex Schinasi and Lee Rotenberg in 2016, IvyMark has now signed up some 2,400 design firms and under Houzz will likely be scaling that quite significantly.

“We’re delighted to join forces with Houzz, a natural fit for IvyMark when it comes to innovation, culture, and user base,” said Rotenberg, in a statement.

“This is a perfect match from many perspectives,” Cohen said, noting that the two companies “have the same goal in mind of helping designers.” This will include Houzz now adding the ability to take payments online from clients and helping to automate the processes that go into how those client relationships are managed.

The idea is help designers shift time spent to more creative pursuits. “Designers are not really business people,” Cohen said, referring not to their ability to handle invoicing, but about reducing the amount of time they spend on it. “They like spending time designing and this will help them do that more.”

The move is an interesting turn in how Houzz is developing its part community development/part marketplace platform for the world of home improvement and design. The company has developed a large base of users already — some 1.5 million professionals in some 65 different categories are currently on the site, on top of its many consumer users — and there is room to keep growing that and expanding with new tools and features to engage its wide range of consumer users, as well as into newer markets like India. But what is there now represents some significant scale that Houzz can now start to monetize more as well.

Cohen would not comment on whether it planned to take IvyMark’s platform and expand it to the other kinds of business people who are currently engaging on Houzz, saying it’s “too early” to say, but I would guess it’s a fair bet to say that this is the direction that the company is going.