Local social network Nextdoor raises $123m at $2bn valuation
Nextdoor, a social networking site for local communities, has raised $123m in new growth funding at a $2bn valuation, as it continues its expansion into Europe.
This week sees San Francisco-based Nextdoor launch in Denmark and Sweden, extending its network of more than 236,000 active neighbourhoods into a total of 10 countries.
The new financing comes six months after Sarah Friar, former finance chief at Jack Dorsey-led payments company Square, joined Nextdoor as its new chief executive.
“I think there is more we can do in Europe but also globally,” Ms Friar said of its new financial firepower.
Nextdoor is also building a new self-service advertising platform catering to smaller, local businesses such as handymen or neighbourhood restaurants.
At the moment Nextdoor’s advertisers are primarily large national brands, such as John Lewis in the UK, which are looking to reach a local audience. While Ms Friar would not provide revenue figures, she said that sales doubled last year and were on track to double again this year.
“From a product perspective, I really want to see us lean into the local business opportunity,” Ms Friar said. “Nobody to date has done local well.”
Though the company, which has 300 staff, is not yet profitable, that is “really a choice”, she added, as Nextdoor invests in international expansion.
Riverwood Capital, a tech-focused private equity firm, is leading the new round, with existing investors including Benchmark and Kleiner Perkins also participating. The new equity takes the eight-year-old company’s total financing to more than $400m.
“We believe Nextdoor represents the future of local community and commerce,” said Chris Varelas, co-founder and managing partner of Riverwood Capital, who is joining the company’s board of directors.
Nextdoor has seen its valuation almost double since 2015. But in that time, the company has seen competition increase from rival community apps such as Amazon-owned Neighbors, which is built around the ecommerce group’s Ring security cameras, and social news start-up Citizen, as well as Facebook and Google, which are both investing to expand their local businesses.
“People don’t need two local social networks, so it’s a fairly strong moat we’ve built around ourselves,” Ms Friar said.
While three quarters of Nextdoor’s communities are based in the US, Nextdoor faces less intense competition in Europe, she added. “Nobody else is anywhere near our scale,” she said. “We have the balance sheet to make sure we own the opportunity.”
Nextdoor has also been able to capitalise on a “backlash” against more traditional online social networks that “hide everyone behind a pane of glass” and have been linked to social isolation and anxiety, Ms Friar said. “Technology needs to find a better way and Nextdoor is that better way.”
However, the site has been criticised for encouraging curtain-twitching anxiety about local crime, as well as providing an outlet for localised racial prejudices.
Nextdoor verifies its users’ home addresses and real names and shows them alongside their online postings, which Ms Friar said can be a bulwark against bad behaviour. But it has also added what it calls “kindness reminders” to “make people think before they post”, she added. “Areas like community health will remain a big investment area for Nextdoor.”