DTC Briefing: How Havenly is building out its portfolio of brands

Havenly CEO and co-founder Lee Mayer described the company’s foray into acquisitions as “a little bit accidental.” She said Havenly initially sought to acquire brands because it made sense from a product perspective; it would allow interior designers to recommend sofas or pillows from Havenly itself rather than directing customers solely to buy products from other companies. But, she acknowledged that Havenly’s acquisition strategy has been aided by the fact that valuations are now “a little more back down to earth,” and more startups are looking for an off-ramp as venture capital has gotten harder to come by. That’s allowed Havenly to acquire more brands more quickly. 

Havenly’s services start at $99, which gives customers access to one-on-one design help through the network of interior designers that Havenly works with. Customers can pay more to access other perks, such as in-person consultation with their interior designer.

In 2022, Havenly made its first home decor brand acquisition when it bought The Inside, a DTC custom furniture startup. At the time, Mayer said that Havenly was considering building its own home decor brands but decided that acquiring a brand was a faster way to gain even more supply chain control. It was a time when furniture brands were still struggling to catch up on back orders after seeing a huge surge in demand during the pandemic. 

The company then made its second acquisition at the beginning of 2023 when it bought Interior Define’s intellectual property after the brand went through a bankruptcy-like alternative known as Assignment for the Benefit of Creditors. As Mayer previously told the Business of Home, she got a call the Sunday after Thanksgiving that Interior Define was running out of cash and was on the verge of imploding if a company like Havenly didn’t swoop in and buy it. 

Not all of Havenly’s acquisitions happen under such dramatic circumstances. Mayer said that Burrow, its most recent acquisition, didn’t need saving and was bringing in nine figures in revenue. But she had known Burrow’s CEO Stephen Kuhl for a while and thought the brand had some products, like media consoles, that filled a gap in Havenly’s offerings. 

While Mayer said she is getting more inbound deal flow as Havenly becomes a more well-known buyer of brands, she said that “we’re not a perfect buyer for everyone.”

“We aren’t in a position where we can spend hundreds of millions of dollars in cash to buy these things,” she said. Havenly has raised some $57 million in venture funding since launching in 2014. “If you are looking for a ton of cash return, it’s not an obvious play,” she said. 

Rather, the company’s pitch is that brands get an owner who understands the digitally-native consumer and who can continue to grow the brand’s name recognition within the home goods space. 

“We try and extend the brands that were built. We try and retain as much as a team as possible,” she said.

Havenly now has two dedicated individuals on its corporate development team, both of whom come from a private equity background. They work with Mayer most closely on the acquisitions. 

The company consolidates certain functions, like technology and supply chain, across all five brands. But Mayer said the company does try to ensure that certain functions — like those that deal with “brand expression” — remain focused on just one brand. 

Now, Havenly is thinking about how it can more closely cross-promote these brands, particularly within retail. Its interior designers can already recommend products from Havenly’s handful of brands to customers. But in April, Havenly also started experimenting with displaying products from The Citizenry within Interior Define stores; it also now has a pop-up for The Inside within Interior Define’s Santa Monica store. “We are really bullish on retail,” Mayer said. 

Havenly’s acquisition spree comes at an interesting inflection point for home goods companies. Covid pulled forward demand for a lot of home goods products; in turn, some companies started to see sales decline around 2022 as demand softened. 

William Susman, managing director at Cascadia Capital, said that, overall, “the home industry is getting back to normal — but right now, the consumer is being very discriminating.”

The challenge for a company like Havenly, he said, centers around, “Is the product, price and value proposition compelling enough?” Especially when considering the fact that many of the companies Havenly has acquired, like Burrow and Interior Define, are still young startups, trying to compete against established brands like Crate & Barrel and West Elm. 

Mayer, for her part, said that the founders she speaks with — including those who operate in the home goods space as well as in other industries — are hoping that lower interest rates will “​​offer a little bit of a reprieve from what’s been a dry demand environment.” 

In this environment, she said, founders seem to be more willing to talk openly with one another, to share notes on what’s working and what’s not — and to potentially consider a deal with a company like Havenly. 

“There’s a little bit more collaboration….there’s even lower expectations around things like acquisitions,” she said. There’s a lot of openness to creativity and creatively partnering.” 

What I’m reading

• Foxtrot is slowly rising from the dead. It has resumed its e-commerce business and reopened its third location, Retail Dive reports.
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What we’ve covered

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