Invest in Daniel House Club

Daniel House Club exists to simplify the business of design. We built an online marketplace that makes it simple for interior designers to profitably source everything they need to complete a project. Our management of sourcing and logistics frees designers from back-office tasks they hate so they can focus on what they love: designing the perfect space for their client.

Navigating the intricate web of wholesale furniture is a full time job. Since the majority of designers in North America work independently, this is just too much work and leads many to experience burnout.

Even though they are big customers, each buying over $100,000 a year, they’re left on their own to work through an archaic system of reps, ordering by phone/email/fax, meeting big opening orders meant for retail outlets, and trying to figure out how to manage shipping and delivery.

We are changing the business of design and making it incredibly easy for interior designers to find and buy what they need for their projects, at prices that are actually profitable. We do this by putting all their favorite vendors in one spot, removing all minimum orders, building tools that make it easier to plan with their clients, and by managing all their logistics.

All of this easily saves a designer 15-20 hours per week, and can even save a whole salary in a growing firm. Simply put, we are the back-end of interior design so designers can spend more time doing what they love.

There are over 140,000 interior designers working in the US. The vast majority, roughly 125,000, are small firms of one to 5 people who make up $15B of the market. These are the exact people Daniel House Club serves. It’s a large, active, and very driven market.

The small size of each firm and their geographic disparity means they have historically been underserved. With the past experience of Caleb, our CFO & COO, we have built Daniel House Club from the ground up with best-in-class software to support these customers efficiently.

Two of our founders, Peter and Alex, have intimate experience with the complexity of the market, in fact Daniel House Club was born out of their experience.

Managing a rapidly growing design firm for 5 years before starting Daniel House Club, they constantly ran into issues sourcing - from reps not replying, to pricing that meant they would have no profit leftover. Eventually, they started to build an internal system to supplement their project management work and realized they had built something that would simplify the life of every other interior designer.

Though Peter and Alex had extensive industry experience they needed to supplement their team with additional skills. Caleb joined in early 2020, bringing years of experience scaling multiple e-commerce companies and building out backend infrastructure that will support a transaction volume at DHC upwards of $450M in annual revenue.

Additionally, Robert Fodor recently moved from our Advisory Board into the VP of Sales & Business Development role on our team. He has 20 years of experience building trade programs for well respected companies like Design Within Reach, 1stDibs, and Chairish. We also have a strong advisory board of tech leaders, experienced startup veterans, and industry experts.

We make money in two ways. First, when designers purchase through our site, we purchase from our vendors at a lower cost. This margin in a marketplace business model is often referred to as the "take rate." As our volume grows, our pricing with vendors improves so our take rate increases.

All products are listed on a consignment basis, meaning we don't have to purchase any inventory. This means no cash gets tied up in inventory and there is no risk of inventory obsolescence. Additionally, our volume allows us to have net payment terms with our vendors, which increases our working capital with a 50 day cash flow cycle.

The second way we make money is through membership subscriptions fees. Fees account for 3% of our overall revenue and they are very successful at driving loyalty. Paying members are significantly more engaged with us for their annual purchasing. PRO+ members have an 87% repeat purchase rate and spend 7.5x FREE members.

(Updated slide: data through 5/23)

(Original slide: data through 11/22)

We have gained significant traction since going to market in August '21. Our membership growth has been consistently high on a very low $63 CAC, showing strong customer demand. Most of our lean marketing budget has been focused on new membership growth. These members are making consistent purchases and increasing their year over year spend.

We ended 2022 with nearly 2,000 members, 116 vendors, and $1.6M in Gross Revenue for FY22.

Our customers are asking for new vendors on a daily basis. This has been one of the hardest areas to scale, as we have a current backlog of 50,000+ products and growing. We have seen that adding a new vendor immediately leads to additional sales, so funds raised today will go directly toward reducing this backlog and driving revenue growth.

Forward looking projections cannot be guaranteed.

With the help of industry experts, we developed assumptions for three key metrics that drive our revenue:

1) Total members

2) The amount of our members who are purchasing

3) How much those members spend each year

To drive the growth in the metrics we are focused on adding vendors, products, and building out an internal sales discipline to support our customers.

We distinguish ourselves from the competition in several ways. Our brand has been created to reflect a high-end design experience. Our services are built to solve real pain points designers face so they can rest easy and continue to focus on their design work. And we are committed to offering the best customer service a designer can receive.

Future projections cannot be guaranteed

We are built on a much simpler model than 1stDibs, working with established wholesalers who offer greater product availability and a significantly higher margin. Though Wayfair works with a larger customer base, we work with a customer who is consistently buying in volume. Companies built on strong, recurring revenue have outsized acquisition multiples and IPO valuations.

Over the last 18 months we have proven our concept, built a strong V1 front-end site that customers enjoy using, built the framework for an easily scalable back-end, and learned how to effectively reach our customer. We accomplished this with a lean team and only raised $620K. Today we have over 2,000 members and topped $1.7M in revenue in 2022.

Forward looking projections cannot be guaranteed. A total of $1.25M is being solicited in this offering.

We are seeking $800,000 to support our continued growth over the next 18 months. Funds invested today will be used to expand on activities that are already generating revenue and strong growth. We will build out designer requested features, expand the integrations and automations of our best-in-class backend software, and build out our team to add capacity to support sales and adding products.

Completing this funding round allows us to focus on expanding and delivering value to designers, as we work with them to simplify the business of design.