Block Renovation, a startup that wants to make home makeovers more predictable and less painful, is taking its New York-tested platform national.
Just four months after its last fundraise, Block raised $50 million in a Series C round led by Softbank’s Vision Fund 2, with participation from existing investors Giant Ventures, NEA, Morningside and Lerer Hippeau. The raise brings the startup’s total funding to $104 million.
Block’s Series C comes amid a national housing boom fueled by cheap debt and low supply. About half of new homebuyers undertake renovations, but hiring a contractor to redo a kitchen or bathroom is fraught with uncertainty: It is difficult to source skilled labor; permitting can be tedious, costs can fluctuate wildly, and timelines are frequently unreliable.
“The business model essentially has been, ‘I’m going to hire two guys in a van and pray,’” Block co-founder Koda Wang said in an interview.
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The New York-based company, founded in 2018 by Wang and Luke Sherwin, focused initially on bathroom renovations on its home turf. It has since expanded to kitchens and has begun offering its services in California.
Block’s platform digitizes and automates the renovation process from design to materials procurement and project management. Customers get regular updates, with photos, via the app’s dashboard. The company says data crunching allows it to provide accurate estimates.
The downside is a sacrifice of originality: A user must select from the range of materials and templates provided. Block’s design options are upscale, but if customers want alternatives, they must source the products from the company’s vendor network and pay a fee.
The company profits by negotiating better labor rates and buying materials in bulk. Rising materials cost and supply chain disruption from the pandemic present the largest challenge today, according to Wang.
Wang says the platform benefits contractors by providing them with a steady stream of business and by taking the burden of materials sourcing, advertising and back-office functions such as billing and payments off their hands. Contractors must apply to participate in the Block network, and only about one in 15 are selected.
The company will soon expand to other major metros and begin offering “modules” for other parts of the house, Wang said. He declined to offer specifics.
The company will be competing in new markets with incumbents like the home services website Angi, but those platforms still put the onus of contractor selection and project planning on the consumer, Wang said.
“We’ve demonstrated that we can do multiple products with the bathroom and kitchen modules. And we’ve demonstrated that we can do multiple geographies,” he said. “Now it’s time to scout.”