Sydney-based start-up Sofia Furniture has received $1 million in funding from the founder of an ASX 100-listed company, and is now preparing to open a showroom in the city in coming weeks.
Sofia Furniture, founded by brothers Jack Teoh and Steve Davis, who named the business after their dog Sofia, aims to provide consumers with luxury furniture at affordable prices.
The $1 million in funding has come from an investor who would prefer to remain anonymous.
“We’re in the same office as a few other start-ups. We work with Jekkle and BrandTable. Through working with them we approached a few venture capital firms,” Teoh says.
“We received VC funding from one of the founders of an ASX 100-listed company. We pitched the idea to her and she loved it. She is a prolific VC funder.”
“It didn’t take long. We spent a few weeks pitching and she was the first who gave us a call.”
The business, which has five staff, claims its online-only model can save customers up to 70% off traditional retail prices. However, it will open a showroom in the Sydney CBD in about three weeks. It is also aiming for revenue of $500,000 in 2012/13.
“We really see a world in which the physical blends with the virtual. Showrooming will be a huge part of everyday life,” Teoh says.
“The showroom is sponsored by [our investor], which is where part of that money’s going.
“I think because we all have a technical background we didn’t have to spend money on the development side of things.
“Most of that money will be spent on marketing and buying inventory.”
The business was originally self-funded, with the founders forking out around $15,000 in order to get the business off the ground.
“We were able to start the business by hiring a developer off an online forum and in-house designer. We also borrowed a warehouse from a family friend as well,” Teoh says.
“I was looking for a sofa for my parents’ granny flat and I was about to fork out $3,000 until I realised a factory of a friend of mine actually manufactured the same sofa,” Teoh says.
“They were selling it for $400 – a fraction of the price I was about to pay.
“I was curious and he told me about how the industry works. It turns out every middleman – agents, traders, importers, wholesalers, etc – makes a huge margin and it is widely accepted.
“We decided it was time to shake up the industry a little by offering affordable designer furniture direct from the factory to the consumer.
“That way we skip the middlemen, salespeople and expensive rents, and offer our customers amazing savings.”
Teoh is confident Sofia Furniture will stand out in what is becoming an increasingly crowded market, although he admits there have been challenges.
“Sourcing the product [has been the greatest challenge] – we felt as if we needed to be as environmentally conscious as possible,” he says.
“So we found factories that only use responsibly sourced wood from Scandinavia. This was an enormous hassle but we eventually found one after many weeks searching.
“We are not into the replica business. We design our own product and are proud of it. We love the quote from Jeff Bezos – ‘Start with the customer and work backwards’.
“So we try to have that embedded in our company culture.”
Teoh says the business has also leveraged technology in order to reduce the price point of each item.
“Utilising iPads within our showroom as the point of purchase, customers can order online directly, cutting out costs associated with sales staff,” he says.
“We are also implementing newer technologies like NFC to allow customers to tap their phone on our products and have information delivered straight to their smartphones.”