Nextdoor Goes Public Via SPAC Transaction
Nextdoor Valued at $4.3 Billion
Nextdoor, a social media app which connects people in neighborhoods, is going public via a SPAC transaction with Khosla Ventures (KVSA). The deal, which is expected to generate $686 million in gross profits, values Nextdoor at about $4.3 billion.
A large number of companies opted to go public via SPAC earlier this year, but that trend has slowed recently. With so many shell companies competing for merger targets, it has also been difficult to find quality partners. Khosla Ventures says it looks for cutting-edge tech companies with strong growth potential and clearly defined goals. The firm believes that Nextdoor fits the bill.
Nextdoor’s Strategy
Nextdoor boasts a large user base in more than 275,000 neighborhoods across 11 countries. The company says its social media app is used by one in three households in the US. Nextdoor makes money partly by selling ads to small businesses. It also helps companies reach new customers in other ways.
Of the $668 million in gross proceeds from the deal, $270 million is from a placement by funds managed by T. Rowe Price (TROW), Baron Capital (BCAP), Dragoneer (DGNR), and other investors. Nextdoor will use proceeds from the deal to grow its staff, create revenue generating tools, and develop its products. Prior to the deal Nextdoor was valued at $2.2 billion.
Investors Bet on Growth
The merger with Khosla is expected to be completed in the fourth quarter. Nextdoor’s CEO Sarah Friar will remain at the company’s helm.
During the pandemic, people were stuck at home and suddenly became more interested in what was going on in their neighborhoods. Nextdoor’s ability to provide that information led to growth. Nextdoor and Khosla are betting that interest in the app will remain despite a return to pre-pandemic habits.
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