Dive Brief:

• Following a home furnishings boom, DTC outdoor furniture brand Neighbor announced it raised an undisclosed sum in Series A funding from Strand Equity. Neighbor did not immediately respond to a request for details around the amount raised.
• The financing will allow the company to create new products, hire employees and launch marketing initiatives, according to a press release. 
• In the future, the company aims to expand its Haven collection, develop new outdoor furniture collections and add more outdoor goods to its product assortment by 2023, per the press release.

Dive Insight:

Neighbor co-founders Nick Arambula, Mike Fretto and Chris Lee brought their prior experience from DTC mattress brand Tuft & Needle to grow the outdoor furniture company. Partnering with retailers like Crate & Barrel helped the company scale quickly.

"We're incredibly excited to partner with Strand Equity and bring them along on our journey to build Neighbor," Arambula, CEO of Neighbor, said in a statement. "It was evident from our first conversation that they are enthusiastic about our approach to brand and design, but more importantly, appreciate our desire to build a profitable business rooted in creating an impeccable customer experience."

But as Neighbor raises funds to grow its product lineup and bring on more employees, it faces competition from fellow DTC outdoor furniture brands. Outer, another DTC brand, raised $10.5 million in funding from Sequoia Capital China last year. With that investment, the company planned to introduce more products besides furniture and rugs, add to its Neighborhood Showroom model and continue its sustainability efforts. In August, Outer opened its 1,000th Neighborhood Showroom, which enlists current customers to showcase Outer products to new shoppers.

Meanwhile, Tuft & Needle — where the Neighbor founders previously served as executives — has undergone its own changes over the past few years. In 2018, the DTC brand merged with Serta Simmons Bedding, a move that tasked Tuft & Needle co-founders J.T. Marino and Daehee Park with shepherding Serta's omnichannel evolution. Last November, Serta Simmons tapped Shelley Huff, who had been leading Tuft & Needle as CEO in addition to her role as the COO of Serta, to serve as the CEO of the whole company, succeeding David Swift.

However, as DTC home goods brands raise capital and add new items, it remains to be seen whether companies can maintain their pandemic-era growth. Home retailers that were once in trouble before the coronavirus upended global supply chains experienced revenue bumps as consumers spent more time at home. But more recently, some are facing renewed challenges as demand wanes.