Nextdoor, a neighborhood social media app, announced Tuesday that it will go public through a reverse merger with a special-purpose acquisition company, valued at $ 4.3 billion .
“It will generate a lot of revenue, $ 686 million gross, for a true blue-chip group of investors,” which will help fuel the expansion, Sarah Friar, CEO of Nextdoor, told CNBC on Tuesday.
The deal with the special purpose vehicle Khosla Ventures Acquisition Co II includes a private investment of $ 270 million from Baron Capital Group, advised by T. Rowe Price Associates and Cathie Wood’s Ark Invest.
Speaking on Squawk on the Street, Friar said San Francisco-based Nextdoor will continue to expand into new areas, which in turn will generate more content for the platform. She said it will continue to invest in both small businesses and its proprietary advertising technology to support its monetization and revenue streams.
The platform, founded in 2011, enables users to organize events, warn neighbors of dangers and distribute useful information such as business postings or pandemic-related news. Earlier this year, Nextdoor posted an anti-racism notice after long criticism for making racist comments on its platform.
Nextdoor is used in more than 275,000 neighborhoods around the world and in nearly one in three US households, according to a company press release.
“Nextdoor is the neighborhood social network just like LinkedIn is the professional network,” said Vinod Khosla, founder of Khosla Ventures, on Squawk on the Street, who appeared alongside Friar.
[Nextdoor] has … not only the strong network effects, but also very strong local online-offline effects which are very, very rare, “added Khosla, expressing his confidence in the company’s metrics and future growth potential.
Friar, who served as Square’s chief financial officer from 2012 to 2018, said Nextdoor saw daily active users grow by 50% over the past year. It also reported an acceleration in average revenue per user, or ARPU, in the first and second quarters of this year, Friar added.
The ARPU increases are being driven by the growing engagement of members on the platform and more sophisticated advertising technology platforms, Friar said.
The company is also working on other ways to increase sales, she added, “especially in terms of local commerce, local businesses and really interesting ad formats that you can’t get anywhere else.” Friar noted Nextdoor’s collaboration with the grocery stores of Moderna and Albertsons Companies on a map of Covid vaccine locations.
“Only Nextdoor can get that message across and deliver it locally,” said Friar.
Nextdoor, which joined CNBC’s Disruptor 50 companies in 2015, receives an implicit 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 is traded under the ticker symbol “KIND”.
– Reuters contributed to this story.