Online building supply marketplace BuildDirect has pulled off the venture capital equivalent of Irish twins, staging two large funding rounds in the same calendar year. The Vancouver-based startup announced a $50-million round on December 10, coming after a $30-million cash injection last January. The $80 million total represents probably the largest venture capital raise by a Canadian company in 2014.
All of BuildDirect’s existing shareholders (including OMERS and Mohr Davidow Ventures) ante’d up this time, with the addition of new investor BMO Capital Markets.
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The company is moving from an e-commerce model towards an open platform called Home Marketplace, which enables buyers and suppliers of construction materials to deal with each other directly. “It feels like we’re standing in the way of some of our growth,” explains CEO Jeff Booth. “This Home Marketplace platform is really about making this engagement happen faster—expanding the choice and expanding the analytics and delivery capability to make that happen.”
That’s not to say sales have been slow; of third-party estimates that put the value of transactions on BuildDirect between US$100 million and US$150 million this year, Booth says: “That would be in the right range.” He also says 2015 will be a “really significant year,” when the company is likely to reach the scale needed to break even on operations.
“Now we’re growing really quickly off a very material revenue number,” Booth says. “This $50 million is proof of that.”
Booth compares BuildDirect’s new Home Marketplace model to iTunes in that it gets out of the way of the marketplace making its own purchasing decisions. “I am constantly blown away with what the market picks that we would never have guessed,” he says. For example, buyers on the site have been clamouring for woodgrain porcelain tile, something few of the major tile wholesalers thought to stock this year. “We became the leaders in that overnight,” Booth says.