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Why We Invested: Inhabitr, Inc.
Inhabitr streamlines Furniture, Fixtures, & Equipment (FF&E) procurement and operations for real estate owners and managers via their industry-leading “furniture cloud.”
This week, we introduce you to our very first portfolio company - Inhabitr, Inc.
How a proptech investor got interested in furniture
As part of our investment thesis, Hamilton Ventures looks to partner with companies that possess:
a) a clear vision to transform how the built environment functions
b) an offering with a proven problem and customer use-case
c) a demonstrable opportunity to make real estate more sustainable, inclusive, and innovative.
In August 2021, we invested in Inhabitr because we recognized the company's potential to reshape the $80B commercial and residential furniture market towards lower waste, increased transparency, and better quality. We were also very cognizant that practically all of the venture-backed competitors at that time were focused on the B2C channel with high-income apartment renters rather than the more lucrative B2B real estate channels where Inhabitr was acquiring customers. This head start in B2B was a crucial part of our investment thesis and helped us overcome the generally asset intensive nature of the furniture business (more on that below).
In 2022, as we built on our relationship with the management team (one of the strongest we’ve seen), we became further convinced that Inhabitr has built a transformative and differentiated offering in the furniture rental space. This advantage has allowed Inhabitr to quickly expand its customer base beyond traditional multifamily and into the commercial office furniture, student housing, short-term rental, and hospitality furniture markets.
An impressive CEO and a best-in-class team
It took more than a believable story and proven traction for us to make an investment in a generally more asset-heavy business model (vs. traditional SaaS). The final rationale for making this leap was Inhabitr’s CEO, Ankur Agrawal. He is one of the most impressive founders we’ve met since Hamilton’s inception. Ankur is one of the youngest individuals to make Partner at McKinsey and he cultivates talent like nobody else. Many top tier VCs consider talent attraction the number one skillset a Founder needs to build a successful company. Ankur’s combination of technical brilliance, relentless work ethic, and approachability has allowed him to attract an extremely talented team. Examples include Gambhir Kaushek and Khushbu Sikaria both of whom have impressive resumes in the multifamily and hospitality sectors. In fact, one of Hamilton’s Investors, Anand Gajjar, was so intrigued by the team that he decided to formalize his Advisor role by spending more time in the day-to-day capital market operations for Inhabitr. Ultimately, Ankur’s strength across product development, sales, logistics, and people ops are what makes him a superior founder. This skill set has enabled him to manage Inhabitr’s rapid growth with clarity and integrity.
How Inhabitr is reshaping FF&E for buildings
Inhabitr provides real estate owners and managers across the asset spectrum with better quality furniture (relative to the price point) and faster installation than its competitors. This may sound relatively simple; however, it is anything but. Go and try to place an order for 150 beds, 300 end tables, and new furniture suites for three common areas - good luck. Even if you can get a reasonable quote that fits within an asset’s budget, the estimated time to install could be well over 6 months. It's likely to be a fiasco akin to the 2020 pandemic purchase of a living room couch that cost 3x over market and took a year to deliver - only the headaches are multiplied by the larger scale of a business. The furniture industry's complicated network of overseas factories, middlemen, and longstanding “handshake” deals will make sure of that. These time delays create downtime, which can negatively impact the projected NOI of a real estate asset thereby setting an owner back to the tune of $Ms vs. $Ks. This is where Inhabitr steps in to offer unmatched selection and speed that fits any asset’s FF&E budget and time constraints.
Inhabitr has built the right tech for the right problem
So how does Inhabitr solve the furniture problem for an asset owner? When launching the business, Ankur scoped out two key places along the furniture value chain to differentiate with technology: a) managing procurement logistics and b) accelerating customer floor-planning. Inhabitr uses its proprietary “Furniture Cloud'' to maximize customer choice and reduce cost all while minimizing inventory and supply chain variability risk. The technology tracks and forecasts the inventories of dozens of global furniture suppliers via real-time API feeds. This creates “win-win” supplier partnerships that upend the traditional opacity and low-tech agreements of the furniture supply chain. This low-latency inventory visibility feeds into Inhabitr’s design toolkit, which helps repeat customers achieve 5-10x the design efficiency vs. standard design mockup methodologies. We’re particularly excited that Inhabitr is not an over-engineered product. They’ve identified the areas where they need to win, and they’ve allocated capital prudently to create a world-class suite of product offerings.
A $20B serviceable market opportunity
Inhabitr has strong offerings across commercial hotel furniture, short term rentals (including Airbnb furniture packages), multi family common areas, multifamily furnished living, home staging furniture and office furniture sets. The rental unit market alone (short term rentals, multifamily, student housing, residential staging, and senior housing) includes over 10 million high-potential units with a serviceable addressable market of $20B. As institutional players deepen their involvement in asset classes, we believe Inhabitr’s high flexibility, nationwide footprint, and ability to reduce the well documented furniture waste stream form an unmatched value proposition. We expect that Inhabitr will continue gaining market share and set the company up to service the even larger furniture rental TAM.
What’s next? Growth with the best customers
Due to the competitive advantages' outlined above, Inhabitr has nearly quadrupled its revenue since our investment. While this stat is impressive, what is even more compelling is that the B2B segment sales have grown at a faster clip. This growth has not come at the expense of margins. Inhabitr has been able to significantly improve gross profit over the past two years as they refined their logistics processes. The company has signed some of the biggest names in hospitality, multifamily, and commercial real estate, with large real estate investment trusts (REITs) and real estate private equity (REPE) owner/operators relying on Inhabitr for their rapidly expanding portfolios.
Going forward, we know that Inhabitr will continue alleviating the pain points of owners and operators across the sectors of hospitality, multifamily, commercial office, student housing, and short-term rentals, with particular strength in its REIT and Enterprise REPE customer base. The company's market leading prices and margins will be an important advantage as their scale increases. Importantly, Inhabitr’s growth improves the cash flow dynamics of the company’s supplier partners and real estate customers offering a strong value proposition and alignment of incentives. Hamilton is very excited to be a part of that growth.
At Hamilton Ventures, we’re thrilled to support Inhabitr. They have proven again and again that quality furniture installed quickly at great prices can transform the spaces we all inhabit. We think their recent growth is just beginning. If you, or any real estate owners you know, are interested in Inhabitr’s furniture offerings, please don't hesitate to reach out. To learn more visit inhabitr.com, or schedule a demo by contacting:
Micah Hollingsworth (STR, Student Housing, and Multifamily): firstname.lastname@example.org
Gambhir Kaushek (Hospitality and Commercial Office): email@example.com
All segments and queries: firstname.lastname@example.org
Connect with Hamilton Ventures
If you are interested in investing in our portfolio opportunities, reach out to Prashant Kothari: email@example.com