by Nate Bek on August 1, 2023 at 8:00 amAugust 1, 2023 at 9:05 am
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Source, a Portland, Ore.-based startup that helps architectural and design firms procure interior design products for commercial real estate projects, raised $8.5 million.
The company’s platform helps interior designers manage budgets, select products, and make purchases. It features a curated list of more than 250,000 commercial-grade furniture, fixtures and equipment (FF&E).
Customers can search for specific products on Source using filters such as whether an item can be cleaned with bleach — a must for hospitals — and for environmentally-sustainable products. Then they can order samples, which automatically connects them to local sales reps.
The new funding will fuel Source’s expansion of its physical showrooms. The company has brick-and-mortar locations in Portland, Seattle, Denver and Honolulu, and plans to open more locations across the U.S., Source CEO Nicole Schmidt told GeekWire.
The startup’s growth comes as the broader commercial real estate market is in a state of flux, with rising interest rates and hybrid work policies weakening demand for office space.
Schmidt said while office construction is having an “adjustment moment,” other customer segments including senior living centers, hotels, and hospitality-related businesses are furthering demand.
“I learned early in my career to have a diversified set of verticals when you’re in commercial construction so that you can really healthily weather those ebbs and flows,” she said.
Schmidt was a longtime interior designer for commercial spaces before launching Source in 2019. The company, previously called Krowdsourced, sprouted from her insight that other commercial real estate buyers struggled to find centralized product information and tools for collaboration.
Source sells to more than 2,500 architecture and design firms involved in various commercial projects, including student and multi-family housing, healthcare, and transient accommodations. The platform has facilitated purchases for major projects, including furnishing hotels like Hilton, IHG, and Marriott properties.
Schmidt said the pandemic was a tailwind, forcing commercial real estate developers to use digital tools like Source. She added that the current demand is fueled by a push for increased transparency and efficiency in the FF&E procurement process.
Source’s digital tools are primarily free for architects and designers, with some paid services and components available. Most of the company’s revenue comes from taking a percentage of the products purchased through the platform, similar to a marketplace model. The company negotiates a markup on each project, then passes on all costs including freight to clients.
The startup has been profitable previously, but it is reinvesting in growth and engineering, Schmidt said. Following the funding, the company projects reaching profitability within a year, she said.
Source has 40 employees, up from 15 when it raised $2.5 million in seed funding in 2020. The fresh cash will also be used for hiring, and the company plans to add an additional 20 employees by year-end.
The Series A round was led by M13, with participation from existing investors Rise of the Rest, Rogue Venture Partners, Founders’ Co-op, and Oregon Venture Fund. The startup has raised a total of $12.2 million.
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