Deal to Watch: Office Furniture for the Future

Key Stats:

Summary

The Twofold team has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to [email protected].

Problem

The global office furniture market was valued at almost $68 billion in 2019. It is expected to grow modestly at just under 5% annually for the next several years. To be clear, it’s a well-established and competitive industry.

But the way we live and work is changing rapidly. A recent Gartner CFO survey showed that even after the COVID-19 pandemic wanes around 74% of employers are now planning to shift at least some of their workers to permanently remote positions. Facebook CEO Mark Zuckerberg said last week that he expects half of his company’s roughly 48,000 employees to work remotely on a permanent basis within the next five to 10 years. And Twitter CEO Jack Dorsey just told his employees they now have the option of continuing to work from home “forever” if they so choose.

Even so, with urban living space at a premium and housing costs continuing to rise, millions of people’s increasingly crowded homes aren’t always ideal locations for work.

Not everyone will work from home going forward. For those who remain at offices, more flexible “open office” formats are becoming increasingly popular. But this also doesn’t change the need for employees to have their own dedicated space at work in order to hone their focus and maximize productivity.

In both cases, current industry leaders in office furniture aren’t effectively keeping pace with that change. Rather, they understandably favor their legacy furniture concepts revolving around bulky chairs, desks, and workspace designs.

Solution

That’s why Twofold has developed an award-winning portfolio of sleek, modular furniture products designed to make the most of the limited physical space we have available at both the office and home.

Twofold’s first two products comprise its “Assembly Collection,” including The Plaza Space and the Twofold Working Wall. 

The Plaza Space is a mobile meeting space on wheels with a modular design that supports multiple use cases. It can serve as a mini-office for a single employee, a place for multiple workers to collaborate with whiteboards on the doors, or even as a mobile on-site vaccination station thanks to its customizable medical options. The Plaza Space’s modular walls can also be easily interchanged to incorporate any clients’ specific branding, color, or advertising needs. This product has already launched, is available for order, and is ready to scale with a global manufacturer based in Portland, Oregon.

Meanwhile, the Twofold Working Wall is on track to launch before the end of next month (Twofold says “in Q2 2020”), incorporating a Murphy bed-esque design with a table and seat that folds into a four-inch compartment built into a wall. The Working Wall will be the first of Twofold’s so-called “zero footprint furniture” line. These are products that can be stowed completely away and take up no floor space after your work is finished.

Both the Plaza Space and Working Wall concepts can extend to endless variations of new products for Twofold. Other planned versions include individual “Space Tables,” a smaller version of the Plaza Space called the “Micro Plaza,” and a slim “Space Maker” wall that serves as a barrier to delineate individual space and offer separation for open offices.

The Team

At the helm of Twofold is Founder and CEO Anja Bump, who spent the last two decades working in a number of managerial and executive roles centering around supply chain and manufacturing optimization. Her experience also includes a decade of working as an operations and business optimization consultant for both large and small enterprise customers. Bump was compelled to launch Twofold given her childhood experience with increasing urban density in both Europe and Portland, Oregon. She holds a Master of Science degree in inorganic chemistry from Portland State University.

Equally crucial to Twofold’s success is Product Development Lead Steve Linder. He previously worked for nearly 25 years designing “technology furniture” focused on medical products for Anthro Corporation. During that tenure, Linder also designed custom products built for the likes of GE, Intel, Siemens, Boston Scientific, and Microsoft. Perhaps it’s no coincidence, then, that Twofold secured its first formal order from Intel, generating $90,000 in pre-launch revenue.

Meanwhile, Twofold is benefitting from a number of experienced advisors including Gretchen Gscheidle, who spent over 20 years as Design Director for modern furniture giant Herman Miller, and Jayson and Jordan Gates, who each bring 20 years of acquisition and development (A&D) sales experience.

Growth Plan

Twofold will initially focus on capturing the core office and residential furniture markets in the United States — which the company estimates comprise around a third of global demand — followed by an expansion into Europe and Asia down the road. 

But the company also has a wider market in mind. Twofold estimates its two early product lines combined represent a roughly $3 billion total addressable market today, with a roughly 60/40 percent split between Plaza and zero footprint offerings respectively. Going forward, Twofold will expand its efforts to target supplementary growth markets such as trade shows, education, hospitality, and industry-specific opportunities like airports and retail locations. Together these supplementary industries represent an incremental total addressable market of more than $5 billion in the U.S. alone.

To that end, Twofold is currently working on three main goals. The company is building out its online and social-media presence. It is also negotiating a new partnership agreement with a local sales rep group in Portland. Lastly, Twofold is working to improve gross margins for its products (from 29% currently to a longer-term target of 52%) through a combination of engineering and supply-chain cost reductions.

Terms of the Deal

Twofold is raising preferred equity in a side-by-side offering through Seedinvest, with approximately $193,000 in capital raised as of this writing (of a maximum $1,000,000 target) at a $5 million pre-money valuation.

If you invest less than $20,000, your investment will automatically be placed in the Regulation CF offering type. Investments greater than $20,000 must come from accredited investors and will be categorized as Regulation D offerings.

As for perks, those who invest at least $1,000 will be given the chance to submit a Plaza design of their choice (featuring original art or photography). The top 10 designs will be showcased on the company’s website where the public will vote on the best one to be turned into an official Plaza Space design option.

If you invest at least $50,000, you’ll be invited to join the company’s annual investors’ call. Those who invest at least $100,000 will be invited to a yearly investor call with CEO Anja Bump. And those who invest at least $200,000 will also be delivered a two-person Plaza Space with the design and options of their choice.

If Twofold is able to reach the high end of its target, it will dedicate roughly 45% of the proceeds to salaries for “key employees,” 29% to operations, 15% to product development, 7% to marketing, and 4% to travel.

Twofold previously raised $1,579,391 in pre-seed convertible notes at a $3 million valuation, and ended last fiscal year with roughly $240,929 in additional short-term debt. Last year’s pre-launch revenue totaled $91,120. Cost of goods sold were $129,499. Together, that translates to an annual net loss of just under $658,000.

Assuming all goes as planned, however, the company expects to reach just over $420,000 in total revenue next fiscal year. Twofold plans to ramp to nearly $2.3 million in fiscal 2022 and $7.5 million by fiscal 2023. Coupled with improving gross margins, that revenue could rapidly propel Twofold’s income statement into the black.

Rating

Twofold’s innovative, space-saving furniture products address key pain points facing today’s enormous, evolving office-furniture market. But it’s worth reiterating this is a well-established, highly competitive industry. And there’s no shortage of large, well-funded incumbents who could pivot hard toward their own similar product lines should they recognize the ample opportunity before them.

Even with the possibility of competition, Twofold has a lot going for it. The company is run by an experienced team. The significant pre-launch revenue from Intel is certainly encouraging. The established relationship and ability to scale with a global manufacturer illustrate Twofold’s commitment to their product line. Twofold’s story is compelling enough that it might well gain traction on its own or be acquired outright in the process. As such, we’re designating Twofold as a Deal to Watch for prospective investors today.