The SPAC parade continues on this shortened week with information that neighborhood social community Nextdoor will go public through 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 group of capital swimming pools, some prior Nextdoor traders (together with Tiger), Nextdoor CEO Sarah Friar and Khosla Ventures itself.
Notably, Khosla just isn’t a listed investor within the firm per Crunchbase or PitchBook, indicating that even SPACs shaped by enterprise capital companies can hunt for offers outdoors their mother or father’s portfolio.
Per a Nextdoor release, the transaction will worth the corporate at a “professional forma fairness [valuation] of roughly $4.3 billion.” That’s an amazing 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 have been invested at a flat $2 billion pre-money valuation.
So, what’s going to public traders get the possibility to purchase into on the new, greater worth? To reply that we’ll have to show to the corporate’s SPAC investor deck.
Our basic observations are that whereas Nextdoor’s SPAC deck does have some common annoyances, it affords a clear-eyed have a look at the corporate’s monetary efficiency each in historic phrases and by way of what it’d accomplish sooner or later. Our regular mockery of SPAC charts principally doesn’t apply. Let’s start.
Nextdoor’s SPAC pitch
We’ll proceed by means of the deck in its authentic slide order to higher perceive the corporate’s argument for its worth as we speak, 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 number of slides later, Nextdoor particulars its mission: “To domesticate a kinder world the place everybody has a neighborhood they will depend on.” Whereas accounts like @BestOfNextdoor would possibly make this mission assertion as coherent as ExxonMobil saying that its core function was, say, atmospheric carbon discount, we’ve got to take it significantly. The corporate needs to carry individuals collectively. It might’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 prime. 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 determine.
The corporate’s argument for its worth continues within the following slide, with Nextdoor noting that customers grow to be 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 most important U.S. social networks (Fb, Snap, Instagram).
Why undergo the train of sorting Nextdoor right into a cabal of social networks? Nicely, right here’s why: