Nextdoor nabs $60M to bring its network to more neighborhoods
You and your neighbors equal money in the bank for this young but growing company.
Nextdoor, the new neighbor on everyone's block, is quickly becoming a favorite with money-hungry types anticipating a boom on its valuable real estate: your local attention.
The 2-year-old company, makers of miniature social networks private to people in specific neighborhoods, announced Tuesday that it has raised $60 million in funding from prominent venture capital firms Kleiner Perkins Caufield & Byers and Tiger Global Management. Comcast Ventures also pitched in.
Terms of the deal were not disclosed, but a source familiar with the financing told CNET that the sizable raise values Nextdoor at north of $500 million.
The half-a-billion-dollar-plus valuation seems surprisingly steep for the young San Francisco-based startup, which does not make money and has less than 10 million members. But as Nextdoor co-founder and CEO Nirav Tolia told CNET, small startups are benefiting from an opportunistic financing climate, thanks in part to the success of Facebook, where revenue-less companies like Pinterest can raise money at a $3.8 billion valuation.
"Why would I want to risk what the world is going to look like in six to nine months?" Tolia asked. Nextdoor, he added, didn't needed to raise additional funds. The company, which has now raised a total of $100 million over the course of the past 18 months, has $90 million left in its bank accounts after this round.
What likely has investors so keen on the company is its proximity to local services. Nextdoor now has a presence in 22,527 neighborhoods across the US, which adds up to one in every seven US neighborhoods using the service, Tolia said. The service is especially well penetrated in San Jose, Calif., San Francisco, Seattle, Denver, San Diego, and Portland, Ore., each of which have more than 80 percent of their neighborhoods represented on the Web and using mobile service.
The most active neighborhoods see about 50 to 100 posts per day from participants sharing local recommendations, alerting their neighbors to crime, and discussing community happenings. Each day, Nextdoor helps people find, on average, a dozen lost pets and is responsible for 150,000 classified ads, according to the company. In less common occurrences, the service has helped locals band together to find missing children and point police to burglars.
Wherever locals come together en masse, advertisers are sure to follow -- at least, that's the hope of Kleiner, Tiger, and Nextdoor's previous investors, all of which re-upped to participate in the new round. Nextdoor has no specific plans to start earning revenue -- the company would rather follow the if-you-build-it-they-will-come philosophy of Twitter, Facebook, and LinkedIn. The startup, however, often fields inquiries from real-estate agents wanting to list open houses on its map and neighborhood dentists wanting to advertise, Tolia said. The local services opportunity, then, is somewhat comparable to Yelp, which is worth about $4.4 billion.
Nextdoor plans to use its new millions to hire more aggressively and expand beyond the US.