Neighborhood social media app Nextdoor has reached a deal to publicly list through a special purpose acquisition company (SPAC) deal, merging with a shell company backed by Kholsa Ventures.
With a focus on connecting users to their local neighborhood through its flagship platform, and a business model not too dissimilar to other social media giants that relies on advertising revenue, it's easy to see the appeal of taking Nextdoor to market. The unique aspect of being neighborhood-centric especially makes the company stand out, as its advertising model specializes in promoting smaller, local businesses.
With Nextdoor valued at $4.3 billion at the time of the announcement and a massive existing user base and considerable market share ready to be tapped into, a successful IPO would be highly lucrative for Kholsa Ventures.
"We have long focused on partnering with cutting-edge, category-defining companies with tremendous growth potential, strong management teams and, importantly, clearly defined missions," Vinod Kohlsa, founder and managing director of the firm, commented.
The deal is similarly lucrative for Nextdoor, which is looking at a cash infusion to the tune of $686 million. Already, the company is planning to invest in expanding its existing reach and innovating its products. Nextdoor is also planning to expand into philanthropic endeavors after the merger is complete, with Nextdoor's founders contributing shares of the company to the Nextdoor Kind Foundation. The foundation will invest in local neighborhoods--presumably in civil projects such as youth sports, play areas, etc.
While a date hasn't been announced yet, the companies announced that the merger would complete by Q4 of this year. After the merger, the resulting company will trade under the stock ticker KIND.
Nextdoor's SPAC announcement, while significant, comes as the SPAC rush appears to be dying down. While much of 2020 was gripped in SPAC fever, the inevitable cooling seems to have finally come.