The SPAC parade continues on this shortened week with information that neighborhood social community Nextdoor will go public by way of a blank-check firm. The unicorn will merge with Khosla Ventures Acquisition Co. II, taking itself public and elevating capital on the similar time.
Per the previous startup, the transaction with the Khosla-affiliated SPAC will generate gross proceeds of round $686 million, inclusive of a $270 million non-public funding in public fairness, or PIPE, which is being funded by a set of capital swimming pools, some prior Nextdoor buyers (together with Tiger), Nextdoor CEO Sarah Friar and Khosla Ventures itself.
Notably, Khosla isn’t a listed investor within the firm per Crunchbase or PitchBook, indicating that even SPACs shaped by enterprise capital corporations can hunt for offers exterior their father or mother’s portfolio.
Per a Nextdoor launch, the transaction will worth the corporate at a “professional forma fairness [valuation] of roughly $4.three billion.” That’s an incredible worth for the agency that was most lately valued at $2.17 billion in a late 2019-era Sequence H value $170 million, per PitchBook knowledge. These funds had been invested at a flat $2 billion pre-money valuation.
So, what is going to public buyers get the possibility to purchase into on the new, increased worth? To reply that we’ll have to show to the corporate’s SPAC investor deck.
Our common observations are that whereas Nextdoor’s SPAC deck does have some common annoyances, it gives a clear-eyed take a look at the corporate’s monetary efficiency each in historic phrases and by way of what it’d accomplish sooner or later. Our normal mockery of SPAC charts principally doesn’t apply. Let’s start.
Nextdoor’s SPAC pitch
We’ll proceed by the deck in its authentic slide order to raised perceive the corporate’s argument for its worth right this moment, in addition to its future value.
The corporate kicks off with a notice that it has 27 million weekly lively customers (neighbors, in its personal parlance), and claims customers in round one in three U.S. households. The argument, then, is that Nextdoor has scale.
A couple of slides later, Nextdoor particulars its mission: “To domesticate a kinder world the place everybody has a neighborhood they’ll depend on.” Whereas accounts like @BestOfNextdoor would possibly make this mission assertion as coherent as ExxonMobil saying that its core goal was, say, atmospheric carbon discount, we’ve to take it severely. The corporate desires to deliver individuals collectively. It could’t management what they do from there, as we’ve all seen. However the truth that impolite individuals on Nextdoor is a meme stems from the identical scale that the corporate was simply crowing about.
Underscoring its lively person counts are Nextdoor’s retention figures. Right here’s the way it describes that metric:
These are month-to-month lively customers, thoughts, not weekly lively, the determine that the corporate cited up high. So, the metrics are looser right here. And the corporate is counting customers as lively if they’ve “began a session or opened a content material e-mail over the trailing 30 days.” How conservative is that metric? We’ll go away that so that you can resolve.
The corporate’s argument for its worth continues within the following slide, with Nextdoor noting that customers change into extra lively as extra individuals use the service in a neighborhood. This feels apparent, although it’s good, we suppose, to see the corporate codify our expectations in knowledge.
Nextdoor then argues that its person base is distinct from that of different social networks and that its customers are about as lively as these on Twitter, albeit much less lively than on the foremost U.S. social networks (Fb, Snap, Instagram).
Why undergo the train of sorting Nextdoor right into a cabal of social networks? Properly, right here’s why: