On November 8, the social networking app Nextdoor (NYSE: KIND) went public via SPAC IPO. The company enjoyed a share price rise of 50% before closing the day up 17%. It raised $674 million in gross proceeds, valuing the business at $4.3 billion. This includes $270 million from a fully committed private investment in public equity (PIPE).
The special purpose acquisition company to take the company public was Khosla Ventures Acquisition Co. II (NYSE: KVSB).
Nextdoor stock offers a Facebook alternative
Reuters described the neighborhood social network led by Sarah Friar as the anti-metaverse. That’s because the metaverse is all abuzz since Facebook (NASDAQ: FB) announced a name change and immersive pivot into a future virtual universe. But Nextdoor thwarts that idea with its wholesome alternative that embraces living in the real world and interacting with our neighbors.
Back in June, we covered the pending IPO with an article explaining What you need to know about Nextdoor’s 2021 IPO.
Interestingly, Nextdoor has materialized as a popular alternative to the data-driven scourge of big tech’s social media.
Founded in 2011, it allows neighbors to keep up to date on local news, neighborhood happenings and to share information, rate local businesses and exchange goods and services.
Who is Sarah Friar?
Sarah Friar grew up in Northern Ireland during the IRA troubles. She studied at Oxford University and then traveled to South Africa to work as a mining analyst for McKinsey.
Following this she became a tech-focused equity analyst at Goldman Sachs in San Francisco for the decade following the dot-com bubble through to the financial crisis.
She then became senior VP at Salesforce (NYSE: CRM), followed by CFO at Square (NYSE: SQ). Then she finally joined Nextdoor as CEO in 2018.
Talking about the success of Nextdoor earlier this year, Friar said:
“We recognise each other as humans and in that story sometimes that’s the greatest moment where we get far beyond what’s going on at a political or macro level because it’s just human to human [contact] at that level.”
Why did Nextdoor choose to SPAC?
Friar has explained the choice to go public via SPAC was due to its simple, short and predictable process. She spoke with around eight different SPAC companies but chose Khosla for its “scale” and “brand.”
Other notable investors leading the private investment in public equity (PIPE) include T Rowe Price Associates, Soroban Capital, accounts advised by Ark Invest. Nextdoor’s existing investor Tiger Global, also took part, along with Friar herself.
How does Nextdoor make money?
Nextdoor generates income through advertisements and sponsored content.
During the pandemic, its profile has exploded, and the company has enjoyed incredible growth. Indeed, it has grown from 8 million users in 2019 to 58 million in 2020 and was sitting at 63 million by mid-2021.
Nextdoor made $123 million in sales last year. The company projects 47% year-over-year growth this year, followed by 40% growth next year. Nevertheless, it is not yet profitable and expects to lose $101 million in 2021.
According to the company prospectus, it is active in over 280k neighborhoods worldwide. And is used by one in three American households. That’s an impressive growth trajectory with room to scale further.