Nextdoor Closes $21.6 Million In New Series B Funding To Take Its Neighborhood-Focused Social Network Global

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Nextdoor, the company that lets people create private social networks with others who live in their local neighborhoods, has raised $21.6 million in a new funding round led by Greylock Partners with the participation of existing investors Benchmark, DAG Ventures, Shasta Ventures, Allen & Company, Pinnacle Ventures, along with new investors Bezos Expeditions and Google Ventures.

This round, which serves as Nextdoor’s Series B, brings the total venture capital investment in the company to $40.2 million. Greylock’s David Sze is joining Nextdoor’s board of directors as part of the new funding; with Greylock pitching in a total of some $15 million into this new round, Nextdoor now marks the biggest check Sze has written to date as a Greylock partner.

In a wide-ranging interview at Nextdoor’s San Francisco headquarters, CEO and founder Nirav Tolia told me that the new funding will be used to expand Nextdoor’s footprint in terms of both product offerings and geographies. International launches of Nextdoor are on track to occur before the end of 2013, he said, and products such as native mobile apps are actively in the works. The company currently has a staff of 43 that also is on track to grow in the weeks and months ahead.

Big growth, but also big risks
Nextdoor CEO Nirav Tolia

Nextdoor CEO Nirav Tolia

Nextdoor, which first launched back in October 2011 and verifies the home addresses of all of its members to ensure privacy and security, now purports to have private social networking groups created for more than 8,075 neighborhoods from all 50 U.S. states, with daily message counts of more than 500,000. That shows a solid growth trajectory from the last time we checked in with Nextdoor just a little over three months ago, when the site had 5,500 neighborhoods and 300,000 daily messages.

Even so, Nextdoor’s newest batch of big funding may also come across to some people as a big gamble, given the recent closures and stumbles of other locally-focused sites such as EveryBlock, Yardsellr, and AOL’s Patch.

Tolia acknowledges that the local space has been a tough nut to crack, but is confident that Nextdoor has what it takes to succeed in the long haul. “In the social networking space, it tends to be winner takes all,” Tolia said, while taking care to point out that Nextdoor has significant differences from its recently-shuttered competitors. “When you scratch the surface, there were a thousand difference decisions that we made about Nextdoor [in comparison to other sites], making it really neighbor-to-neighbor driven.”

That neighborly feel has taken some work to build up, Tolia says, but he is convinced that it is the only way to really make a successful local social network happen — and that it will pay off. He put it like this:

“Now we have more cash in bank and patient investors, so we are really looking at the long game. We can think about changing the world and not doing a quick flip. We knew when we were doing postcard invitations that this strategy will be valuable in the long term, but in the short term it can be really painful — it’s slow, and it’s hand-to-hand combat.

You know, all startups wish that they could [grow as quickly as] Instagram, but this local space isn’t Instagram. But we hope that after some amount of time, we will have one billion users too.”

A new look and feel with Nextdoor 2.0

Nextdoor did not put off all its product iteration plans until after this latest fundraise. Also today, the company is unveiling to all of its users Nextdoor 2.0, a revamped version of its flagship app that brings some nice updates to its design and functionality.

Perhaps most notably, Nextdoor 2.0 has a new ability for users to view and post certain messages with closely bordering neighborhoods, a feature addition that could further boost engagement on the site. After all, many of us live on what is actually a border between two or three neighborhoods — and if there is a lost cat in, say, San Francisco’s Dogpatch, it could very well be found in Potrero Hill. Allowing people in nearby neighborhoods to see limited updates from each other really makes sense.

Nextdoor 2.0 also has a stronger focus on the site’s crime and safety monitoring functions, with a new dedicated section for such posts. Tolia says that today, crime- and safety-related posts account for 20 percent of all Nextdoor’s messages, making the site a modern-day version of the classic neighborhood watch. The company has started to partner up with local police and fire departments who can use special Nextdoor accounts to issue dispatches and special “urgent alerts” to residents in Nextdoor 2.0, and it plans to step up those types of initiatives in the months ahead.

Of course, crime-fighting initiatives and neighborhood watch groups are necessary and noble — but they’re not exactly known for being lucrative. In terms of future revenue generation, Tolia says that Nextdoor will likely look to establish a foothold in other avenues, such as the $100 billion per year local advertising market (a space that’s ripe for disruption after years of being dominated by the likes of the Yellow Pages and local TV, radio, and newspaper media.) But, Tolia says, Nextdoor is not planning on starting up any money-making activities in the near term.

The product challenges ahead

Looking ahead, Tolia says the biggest challenge for Nextdoor is establishing the right pitch in terms of product. “Successfully replicating everything that goes on at the local level is a real balancing act. You have these really serious questions about privacy, you have to verify people’s addresses, you have users who don’t want to show their real names but want to see other people’s real names,” he said. “And as we grow and see more messages and interactions, we are focusing more on balancing signal and noise. It’s a good problem to have, but it’s still a problem. These are real-world interactions, so it’s really about diving deep and getting it right.”

That is a tall order. But if any company is positioned now with the funds and apparent traction to finally get it right, it indeed might just be Nextdoor.

Here are some images of the newly redesigned Nextdoor 2.0 (click on each to enlarge):

Nextdoor news feed

Nextdoor news feed

Nextdoor group page

Nextdoor group page

Nextdoor urgent alert

Nextdoor urgent alert