Neighbourhood social media app Nextdoor plans for Spac merger

Nextdoor is merging with a special-purpose acquisition company to go public in a deal valuing the social-media network at roughly $4.3bn.

Nextdoor, which operates an app that connects people to information about their neighbourhoods, reached a deal to combine with a Spac sponsored by venture-capital firm Khosla Ventures, the companies said on 6 July.

The San Francisco-based company said it is active in more than 275,000 neighbourhoods in 11 countries. In the US, close to one in three households uses the app, Nextdoor said. The company, led by chief executive Sarah Friar, depends in part on selling advertising to small businesses. It also pitches brands on reaching customers across multiple markets, according to the Nextdoor website.

The planned merger would generate about $686m in gross proceeds for Nextdoor, about $270m of which would come from a placement from funds and accounts advised by T. Rowe Price Associates, Baron Capital Group, Dragoneer and other investment firms, Nextdoor and the Khosla Spac said.

The deal will help Nextdoor hire more employees, invest in tools to generate revenue and further develop its products, the company said. “We remain focused on optimising our strategy and investing in products to drive continued neighbour and organisation acquisition and engagement,” Friar said.

Nextdoor was valued at around $2.2bn as of September 2019, according to PitchBook.

Going public through Spacs, or shell companies that raise money and list on an exchange in order to merge with a private firm and take it public, has soared in popularity. Some Spacs have struggled recently to find quality merger partners.

“We have long focused on partnering with cutting-edge, category-defining companies with tremendous growth potential, strong management teams and, importantly, clearly defined missions,” said Vinod Khosla, managing director at his namesake venture firm and founder of the shell company that will merge with Nextdoor.

Nextdoor’s combination with the Khosla Spac is expected to be complete in the fourth quarter. Friar will continue to lead Nextdoor and Finance Chief Mike Doyle will also continue to handle that job, the companies said.

Write to Micah Maidenberg at [email protected]

This article was published by Dow Jones Newswires

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