This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
Nextdoor hit national headlines early in the pandemic as supply shortages turned the hyper-local social media network into an online trading post for say flour and hand sanitizer.
Now the company is showing exactly what stay-at-home orders and a shift to a digital economy did for its business model. The San Francisco-based company, founded in 2008, agreed to go public Tuesday with Khosla Ventures Acquisition II, a special purpose acquisition company backed by, yes, Khosla Ventures.
The deal values Nextdoor, which was last valued at about $2.2 billion in 2019 per PitchBook, at $4.3 billion. The company makes its money from companies advertising on its platform.
- Backed by investors including Benchmark, Shasta Ventures, and Greylock Partners, Nextdoor grew revenue by about 49% to $123 million in 2020. Net losses in comparison remained relatively steady at about $75 million.
- Okay, yes SPAC projections are generally suspect, but this one doesn’t seem outside the realm of possibility: The company is expecting the growth to slow somewhat this year, rising 44% to $178 million while net losses rise 37% to $103 million. But of course, take it with a grain of salt as the company warns that “future results [are] difficult to predict.”
- Nextdoor does have a heavy audience overlap with Facebook. A chart in the SPAC presentation suggests that about 73% of folks who visited Nextdoor once a month also visited Facebook and Messenger. And, as is Facebook’s playbook, the larger company has launched a Nexdoor clone.
- The deal also adds another company to the list of public ones with a female CEO. Sarha Friar was previously Chief Financial Officer at payments company Square She is also a member of the board of directors at Slack and Walmart.
- For fervid Cathie Wood followers, Ark Invest is among the investors in the PIPE (private investment in public equity, which typically adds a few hundred million of cash to a company looking to go public via SPAC). While a rarer sight in SPAC-related PIPEs compared to the mutual funds like T. Rowe Price, it’s not the first of its kind for Ark Invest: the tech evangelizing investment shop was a part of a deal to take semiconductor company Quantum-Si public in a deal valuing it at $1.5 billion, and another taking protein analysis tech company, SomaLogic, public for about $1.2 billion. Other members of the PIPE include T. Rowe Price, Soroban Capital, as well as existing investors Tiger Global and Hedosophia.
- Perhaps due to its relatively smaller size or due to its focus on users with verifiable real names and real addresses, Nextdoor has generally bypassed the misinformation debate that plagues Facebook and Twitter. Still, the company has come under fire for deleting posts around the Black Lives Matter movement and more broadly, around content moderation.
More than the economics of the deal, that final point—content moderation—will be an increasingly important issue for the company as it takes the SPAC dollars to expand. As local papers disappear, Nextdoor is starting to replace them as the information bulletin board, per WIll Oremus for OneZero. And currently, no one seems to have an easy answer for the information conundrum as even the question of what is true and what is not becomes a political one.
As Friar told my colleague Ellen McGirt last year:
“‘There’s never been more need for local and the power of proximity,’ Friar says, adding that the power of social trust is growing during the pandemic and that people are increasingly choosing to get their news from local sources.”
DIDI DAWDLES: IPOs are generally supposed to be a cheery affair for a company. Not so much for Chinese ride-hailing giant, Didi, whose stock slipped 22% Tuesday less than a week after the business went public. The reason? The Chinese government on Friday announced that new users would not be able to download the app as it conducts a cybersecurity review.
Lucinda Shen
Twitter: @shenlucinda
Email: [email protected]
Jessica Mathews compiled the IPO section of the newsletter.
VENTURE DEALS
- Pine Labs, the Indian commerce platform, raised $600 million. Fidelity Management & Research Company, BlackRock, Ishana, Neuberger Berman Investment Advisers, IIFL, and Kotak invested, valuing it at $3 billion.
- ManoMano, a French startup focused on home improvement products, raised $355 million in Series F funding. Dragoneer Investment Group. Led the round and was joined by investors including Temasek, General Atlantic, Eurazeo, Bpifrance’s Large Venture fund, Aglaé Ventures, Kismet Holdings, and Armat Group.
- Pleo, a Danish maker of company cards and expense management software, raised $150 million in Series C funding valuing it at $1.7 billion. Bain Capital Ventures and Thrive Capital led the round and was joined by investors including Creandum, Kinnevik, Founders, Stripes, and Seedcamp.
- Alto, a Dallas-based ride-hailing startup, raised $45 million in Series B funding. Tuesday Capital and Goff Capital led the round and were joined by investors including F ranklin Templeton, Alumni Ventures Group, Senterra, Green Park & Golf Ventures, and Hope Ventures Capital.
- MaxAB, an Egyptian food and grocery delivery startup, raised $40 million in Series A funding. RMBV led the round and was joined by investors including IFC, Flourish Ventures, Crystal Stream Capital, Rise Capital, and Endeavour Catalyst.
- Furlenco, an Indian-based operator of a furniture and appliance rental startup, raised $20 million in Series D funding. Zinnia Global Fund led the round and was joined by investors including CE-Ventures and Lightbox Ventures.
- Byrd, an Austria-founded warehouses and logistics software maker, raised €16 million ($19 million) in Series B funding. Mouro Capital led the round.
- Wagmo, a pet insurance startup, raised $12.5 million in Series A funding. Revolution Ventures led the round and was joined by investors including Female Founders Fund, Clocktower Technology Ventures, and Vestigo Ventures.
- Canopy, a Lehi, Ut.-based cloud-based maker of software for accounting professionals, raised $11 million in funding . Ankona Capital, NewView Capital, Pelion Venture Partners, and Tenaya Capital invested.
- Toqio, a London-based white-label fintech, raised €8 million ($9.5 million) in seed funding. Seaya Ventures, Speedinvest, and SIX FinTech Ventures invested.
- ShippyPro, an Italian shipping management software maker, raised $5 million from Five Elms Capital.
- Hubble, a London-based marketplace for office space, raised £2 million ($2.8 million). Pi Labs led the round and was joined by investors including JLL Spark and Concrete VC.
- Obviously AI, a Berkeley, Calif.-based no code machine-learning platform, raised $1.1 million in extended seed funding. University of Tokyo Edge Capital Partners led the round and was joined by investors including Trail Mix Ventures and B-Capital.
PRIVATE EQUITY
- Apollo Global Management is weighing a bid for Wm Morrison Supermarkets, the U.K. Grocer, per Reuters. Morrisons already has a bid (among others) from Fortress Investment Group that values the company at $8.7 billion.
- A group of investors including IFM Investors, QSuper, and Global Infrastructure Partners offered to acquire Sydney Airport Holdings, the Australian airport, for A$22.26 billion ($16.7 billion).
- EQT Private Equity and Goldman Sachs agreed to acquire Parexel, a Newton, Mass.-based clinical research company, for $8.5 billion.
- Apollo acquired a 67% stake in RDM Group, a European producer of recycled cartonboard. Financial terms weren't disclosed.
EXITS
- Platinum Equity agreed to acquire Solenis, a producer of specialty chemicals used in water-intensive industries, from Clayton, Dubilier & Rice and BASF in a deal that values Solenis at $5.3 billion.
- Brookfield Business Partners agreed to acquire DexKo Global, a Novi, Mich.-based maker vehicle parts, for $3.4 billion, from KPS Capital Partners.
- Clayton, Dubilier & Rice agreed to acquire and combine Fort Dearborn and Multi-Color Corporation, two label makers. Financial terms weren't disclosed. Platinum Equity was the investor behind Multi-Color.
- US LBM Holdings acquired American Construction Source, a lumber materials company, from Angeles Equity Partners and Clearlake Capital Group. Financial terms weren't disclosed.
OTHER
- SoftBank will acquire the rights to the Yahoo branding and tech in Japan for $1.6 billion.
- Hexagon AB acquired Infor’s Enterprise Asset Management business to for $2.8 billion, from Koch Industries.
IPOS
- Kakao Pay, a South Korean payment startup, plans to raise as much as 1.6 trillion won ($1.4 billion) in an IPO. Ant Financial backs the firm.
- Paytm, the Indian payments company, is close to seeking an IPO that could raise 160 billion rupees ($2.2 billion), per Bloomberg. SoftBank, Berkshire Hathaway, and Ant Financial back the firm.
- Blend Labs, a San Francisco-based mortgage and lending tech company, now plans to raise up to $360 million in an offering of 20 million shares priced between $16 and $18 per share. Coatue, Formation8, and General Atlantic back the firm.
- Daojia Limited, a Beijing-based home cleaning services company, filed for an initial public offering in the U.S. Alibaba Group backs the firm.
- SOPHiA GENETICS SA, a Switzerland-based biotechnology company, filed for an initial public offering in the U.S. Alychlo NV and Balderton Capital back the firm.
- Rallybio Corporation, a New Haven, Conn.-based rare disorder biotechnology company, filed for an initial public offering. 5AM Ventures and Viking Global Investors back the firm.
- Cytek BioSciences, a Fremont, Calif.-based spectral flow cytometry instrument company, filed for an initial public offering. Wudaokou Capital and RA Capital Management back the firm.
- Clarios International, a Milwaukee, Wis.-based vehicle battery technology company, filed for an initial public offering. Brookfield Asset Management and Caisse de dépôt et placement du Québec back the firm.
PEOPLE
- HPE Growth, an Amsterdam-based investor, promoted former General Atlantic and TPG executives Tim van Delden and Manfred Krikke to co-managing partner
