Nextdoor, a social media app for neighborhoods, announced Tuesday it will go public through a reverse merger with a special purpose acquisition company in a deal valuing the firm at $4.3 billion.
“It’s going to bring in a lot of proceeds, $686 million of gross proceeds, on a real blue-chip set of investors” that will help fuel expansion, Nextdoor CEO Sarah Friar told CNBC on Tuesday.
The deal with special purpose acquisition company Khosla Ventures Acquisition Co II includes a private investment of $270 million from Baron Capital Group, accounts advised by T. Rowe Price Associates and Cathie Wood’s Ark Invest.
On “Squawk on the Street,” Friar said San Francisco-based Nextdoor will continue expanding into new territories, which in turn generates more content for the platform. She said it will continue investing in both small businesses and in its proprietary advertising technology to support its monetization and revenue streams.
The platform, created in 2011, allows users to organize events, alert neighbors of danger and spread useful information such as business postings or pandemic-related news. Earlier this year, Nextdoor debuted an anti-racism notification after long facing criticism for racist comments on its platform.
Nextdoor is used in more than 275,000 neighborhoods around the world and in nearly 1-in-3 U.S. households, according to a company press release.
“Nextdoor is the neighborhood social network, just like LinkedIn is the professional network,” Khosla Ventures founder Vinod Khosla said on “Squawk on the Street,” appearing alongside Friar.
[Nextdoor] has … not only the strong network effects but very strong local online-offline effects, which are very, very rare,” Khosla added, while expressing confidence in the company’s metrics and future potential growth.
Friar, who served as Square’s chief financial officer from 2012 to 2018, said that last year Nextdoor saw its daily active users grow by 50%. It also reported accelerating average revenue per user, or ARPU, during the first and second quarters this year, Friar added.
The increases for ARPU are driven by growing member engagement on the platform and more sophisticated ad tech platforms, Friar said.
The company is also working on other ways to boost revenue, she added, “particularly around local commerce, local businesses, and really interesting ad formats that you can’t get anywhere else.” Friar noted Nextdoor’s collaboration with Moderna and Albertsons Companies grocery stores on a map of Covid vaccine locations.
“Only Nextdoor can take that message into a local level and make it happen,” Friar said.
Nextdoor, which was included in CNBC’s Disruptor 50 companies in 2015, gets an implied valuation of $4.3 billion through the SPAC deal. In September 2019, the company was valued at just over $2 billion, TechCrunch reported at the time.
Nextdoor’s merger with Khosla Ventures’ SPAC is expected to close in the fourth quarter of 2021. The company will trade under the ticker symbol “KIND.”
— Reuters contributed to this story.
Source: Finance - cnbc.com
