Nextdoor Adds Another $21.6M, But Can it Meet the Hyperlocal Challenge?

Nextdoor, a social network for neighborhoods that has been growing steadily since its launch, announced today that it has raised $21.6 million in new funding, in addition to launching Nextdoor 2.0, an overhauled version of its platform. The round was led by Greylock Partners with participation from existing investors Benchmark Capital, Shasta Ventures, and others. To date, the company has over 8,000 neighbourhoods on its network, where neighbors register, verify their address, and begin inviting others in the community to connect about local issues.

Co-founder and CEO Nirav Tolia said in an interview with BetaKit that the new round of funding was not out of necessity (the company raised $18.6 million in July 2012), but rather that was about finding the right expertise to grow into a standalone social network.

“We didn’t need this new amount of money, what we needed, and what we always need is expertise, bringing the right kind of guys around the table,” said Tolia. “This fundraising round is much less about the fact we raised money, and the fact that its $21.6 million and that sort of thing, it’s much more the fact that we were able to get Greylock Partners to step up and to lead this round as a way of communicating very strongly their belief that we can be a great stand-alone social network, along the lines of LinkedIn and Facebook.”

The newly launched version of the platform has the same features as version 1.0, letting neighbors post events, sell items, and set up neighborhood watch groups. New features added to the redesign are focused on three areas: preventing crime and safety, helping neighbors communicate with nearby neighborhoods outside their own, and responsive design that optimizes the layout for the web, mobile, and tablet devices. It now has a dedicated section for Crime and Safety posts, where police and fire departments will also be able to post urgent alerts. Expanding the communication capabilities while still maintaining privacy was a result of requests like finding a lost pet, getting the word about a garage sale, or news that’s relevant outside of their specific area.

When asked about possible monetization strategies, Tolia said the company was 100 percent focused on growing its user base and driving adoption. However he was confident that once the platform reaches a critical mass, there will be opportunities to make money through local classifieds and direct mail advertising. Building a user base before considering monetization isn’t new for a social network, but whether communities will be open to local advertising and promotions is something the team will have to measure down the line.

Others attempting to pull off something similar have either closed down or failed to become a Facebook-like household name, and while Nextdoor is growing, it has a long way to go before every neighborhood in the U.S. is on it. Other companies in the space include, HomeElephant which has taken a mobile-first approach, while Neighborgoods focuses solely on the local marketplace piece of the puzzle. Everyblockrecently closed down by NBC, was looking to be a hyperlocal news source, showing that while everyone wants to keep up with the Joneses, they don’t necessarily need to stay updated on hyper-local news on a daily basis.

According to Tolia it’s Nextdoor’s execution, not the idea, that has made it successful to date. “Certainly we’re not the first, but we’re the first to do it right…Friendster was the kind of the first social network, but Facebook was really the first one to do it right. Similarly there have been lots of different sites to build networks on a community level, most of them have failed, it’s very hard,” Tolia added.

With funding and a steadily growing number of users, Nextdoor’s ambition to be the Facebook for neighborhoods will depend on its ability to quickly scale across the U.S., while proving that it has a value proposition that existing networks like Facebook can’t offer. As Mathew Ingram wrote in GigaOM, Nextdoor’s exclusivity (you have to live in a given neighborhood to join) might be the key to its success.

Humayun Khan

Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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