CEO Stephen Culp
Updated Mon., June 2, 2008 0758
Smart Furniture Founder-CEO Stephen Culp told VNC Friday his Chattanooga-based company may soon launch an effort to raise up to $15 million to finance future growth and to develop 3-D technology that could help open the door for an alliance with Google.
Although Smart Furniture contacted at least two Nashville venture-capital firms during previous rounds, Nashville investors have stayed on the sidelines the past five years. During that period, Culp raised $7 million from Delta Capital Management (Memphis), Southern Appalachian Fund (Oak Ridge, London, Ky.), Jemison Investment Co. (Birmingham), Murphree Venture Partners (Houston), Bonaventure Partners (Birmingham), plus angels from Houston and Birmingham and SmartFurniture staff.
Undeterred, Culp said that if a new round of fundraising commences he'll approach Nashville investors again, hoping to find interest. However, he added, "we may have to go West... to find VCs that are interested in technologies that can transform traditional industries."
Though Smart Furniture's plans for another round are tentative, according to Culp, he said the company decided "to float the idea out there to the local venture community to gauge interest..."
Reached this morning for comment, Delta Capital Managing Partner Don Mundie indicated the round is likely to commence toward the end of 2008, with much of the funding going toward continued efforts to "build an engine for rapid growth" via both its SmartFurniture.com and SmartFixtures.com sites. Mundie said the company aims "to have robust infrastructure, so that when the wind really gets at your back, you're not trying to rebuild the platform" while experiencing the "exponential" growth that startups look for.
Why float the idea, now? The driver may be Smart Furniture's budding relationship with Google. Culp said he'll meet with Google for the third time later this month to discuss the companies' shared interest in 3-D visualization. Culp would predict neither investment nor partnership involving Google, which is arguably the reigning master of personalization.
Culp stressed that Smart Furniture, which provides furniture and fixtures customized online to meet customer requirements, already employs 3-D technology. He believes further such enhancements will make "shopping on the SmartFurniture platform better than shopping in real life." Toward that end, apart from Google, the company is exploring strategic partnerships with companies Culp declined to name.
Meanwhile, Google's trajectory is clear. Google's recent partnership with Multiverse Networks to create virtual worlds and its "Sketchup" 3-D design contests for developers are just two of the giant's recent '3-D' signals.
On Friday, Culp expressed confidence that Smart Furniture Inc. could attain through organic growth the profitability it has deferred while continuing to invest patentable technologies, workforce and other assets.
However, Culp explained that an infusion of $10M-$15M in fresh capital would help the company prepare for major business alliances; strengthen its marketing of the Smart Furniture brand and Demand-on-Design(R) mark; and, help finance the scale-up of "proprietary design-IT-content management platforms," while ensuring alignment and integration of the platform with fulfillment and distribution operations. Culp declined to provide revenue and other figures for publication.
As Culp explains it, his willingness to recruit capital outside Tennessee is consistent with his belief that Smart Furniture's success depends on strong alignment of many factors: Not only must purchasers' desires, products, technology, company practices and culture be in-synch -- the company must also recruit investors who understand and appreciate its values and its opportunities.
It'll take both pluck and luck to seize leadership of personalization within the residential, commercial and trade-show sectors, given the presence of such competitors as Ikea, Design Within Reach, Pottery Barn, Crate & Barrel and others.
At 37, Culp's beliefs are grounded in his experiences: For example, he created his first component prototype ten years ago in the garage of a Stanford University professor. He spent seven years living and working in the Bay Area's venture-capital community. He relocated fledgling Smart Furniture from California to Chattanooga. Also in the mix are a stint as a Peace Corps volunteer in Hungary; his continuing service as a U.S. Navy officer (reserve); climbing Mt. Kilimanjaro and other peaks; a degree from the University of North Carolina; and, a law degree from Stanford University.
The insight that eventually prompted Culp to create that first Smart Furniture prototype occurred during a single law-school field trip. During the excursion, Culp found himself wondering how, if it were up to him, he might propose to overcome the furniture- and space-planning problems he had seen employees grappling with inside the offices of a then-startup, known as Yahoo! After the trip, he kept wondering. ♦ Related story, here.