With a pitch for its users to just let go of the things they no longer need, the online used goods marketplace letgo has managed to grab on to $175 million in new financing.
It’s been growing a blistering clip, to over $20 billion in gross merchandise value sold on the platform, up from just $25 million in the months following its launch.
The investor group that came in to finance the company in its last round (and to help back the merger of letgo with rival Wallapop) remains intact, for the Series C investment. It includes original investor Naspers, and 2016 entrants Insight Venture Partners, Accel, the stealthy New York-based venture firm 14W, Eight Roads Ventures, Mangrove Capital Partners and FJ Labs.
The company’s valuation is now approaching $1 billion, according to published reports, and brings letgo to the top of a very crowded heap of entrants in the classified space.
As we reported last year, competition for used goods listings is heating up with a number of big investments and large commitments from online powerhouses creating rivals.
They include smaller outfits like 5miles, which has picked up investment from companies like Alibaba. And also bigger names like OfferUp, which in November last year confirmed a $93 million raise and millions of customers.
And there are new plays from bigger and older players. They include Facebook Marketplace, which has been around forever but has quietly grown to be a threat, according to sources. Just the other week, Facebook moved to put a Marketplace link on the lower bar of its main Facebook mobile app — possibly it’s own mark of how it plans to go after this e-commerce market more aggressively.
An early decision not to charge its users has led to a scorching pace of growth for letgo, which explains its investors’ interest in backing the service. So far, the letgo app has seen 45 million downloads and reaches 20 million monthly active users.
“The kinds of metrics we care about are activity,” says company founder Alex Oxenford, who previously launched OLX with help from letgo’s original backers — Naspers.
Letgo’s decision not to charge for its service is time-tested strategy for battling giants in online retail. Alibaba rode its lack-of-fees to create a multi-billion dollar online behemoth in China, and Oxenford said he’d like to replicate that strategy in the U.S.
The experience at OLX also shaped Oxenford’s strategic decisions. All the way to a reunion of sorts, with a former OLX co-founder. Last year, when we reported on letgo’s merger with Wallapop we noted that Fabrice Grinda, founder of Wallapop acquisition Sell it, helped launch OLX with Oxenford.
As it looks to woo new customers, letgo has introduced an automatic tagging and listing feature using a proprietary software that allows for users to upload products to the online marketplace more easily.
The new listing tool, available through the mobile app, is designed to reduce the friction that some custoemers might feel when they upload a product. Oxenford is rightly proud of it.
“If you open our app and go to post something, you’ll see a red button asking if you want to sell something. Open your camera and take a picture of whatever it is you want to post. You don’t need to write a title or price or anything… if you want to include details… click on add details.”
That instant upload and pricing feature could manage to net the company additional users, along with a more seamlessly integrated chat feature for buyers and sellers on the site (essentially mimicking interactions that happen in Facebook’s marketplace).
And while letgo remains focused on the U.S. the company’s app is also being used in Europe and Canada, Oxenfordsays.