Nextdoor takes special purpose route in $4.3bn deal to go public

Nextdoor  will go public through a special purpose acquisition company (Spac) in a deal expected to value the local social network at $4.3bn.

The San Francisco-based company will merge with Khosla Ventures Acquisition II, a blank-cheque vehicle created by the venture capital firm of billionaire Vinod Khosla, the companies said in a statement on Tuesday. Nextdoor will be listed on the Nasdaq stock exchange under the ticker symbol KIND.

The transaction will generate proceeds of $686m. That includes a $270m private investment from T Rowe Price Group and Cathie Wood’s ARK Investment Management, as well as Dragoneer Investment Group and other backers. It’s expected to close in the fourth quarter.

Nextdoor was founded in 2008 with the goal of creating a sort of local version of Facebook. The app serves as a venue for people to organise events, chronicle local raccoon sightings and report suspicious activity. Critics have said it frequently facilitates racial profiling and a culture of fear.

The company hired Sarah Friar in 2018 as  CEO from Square, where she was the financial chief. Khosla Ventures was a major investor in Square, the Jack Dorsey-founded payments software maker.

Nextdoor had been considering various options for going public as far back as October, Bloomberg reported at the time. With the new funding, Nextdoor hopes to accelerate its growth. The company wants to attract additional users in the more than 275,000 neighbourhoods in which it operates, boost engagement on the app and bring in additional advertisers, according to the statement.

In 2020 was the biggest ever for Spacs, which helped make it the largest ever haul for stock sales. The past six months were slower, partly due to increased scrutiny of Spac deals. That’s a good thing, Khosla said on Tuesday in an interview on Bloomberg TV.

“If you can eliminate abuses in the Spac market,” Khosla said, “it’s a very good, important tool. But the slowdown is healthy and will result in better Spacs and better Spac behaviour.”

Along with the deal, the company said it’s starting the Nextdoor Kind Foundation, a non-profit to help locals rejuvenate their neighbourhoods through grants. The non-profit will be funded by Friar, the three founders and early investor Bill Gurley, committing a portion of their ownership in Nextdoor to the organisation.

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