Khosla Ventures Acquisition Co. II (NASDAQ:KVSB) recently announced its intentions to merge with hyperlocal social networking service Nextdoor. The merger has a pro-forma equity value of $4.3 Billion, making it one of the larger SPAC mergers announced in 2021. The merger is expected to raise $686 million in gross proceeds which will “support new and existing growth initiatives” for the combined company. Upon completion of the merger, the combined company will list on the NASDAQ under the ticker symbol “KIND”. Here’s what investors need to know about the Nextdoor & KVSB merger.

Key details surrounding the Next-door & KVSB merger

  • Firstly, the $686 Million in cash proceeds includes a $270 million PIPE investment at $10.00 a share and $416 million held in the KVSB trust account.
  • The merger is expected to close in Q4 of 2021. This provides investors a timeline between 1st October – 31st December.
  • The merger is also subject to approval by KVSB stockholders and other customary closing conditions prior to completion.
  • In the 2020 fiscal year, Next-door reported $123 Million in revenue which was a 49% improvement YOY. In addition, the company expects similar 40%+ growth in 2021/22.
  • Lastly, Nextdoor is active in 275,000 neighborhoods around the world and currently has upwards of 27 Million weekly active users.

“We have long focused on partnering with cutting-edge, category-defining companies with tremendous growth potential, strong management teams and, importantly, clearly defined missions. Nextdoor exhibits all of these qualities and more, and we look forward to continuing our partnership and accelerating Nextdoor’s growth as a public company,” said Vinod Khosla, Founder of KVSB and Managing Director of Khosla Ventures.

Why are investors excited about NextDoor?

In the United States, nearly 1 in 3 households turn to the Nextdoor platform to connect with neighbors, businesses, and public services. Nextdoor also enables businesses to reach customers locally via the platform. The proposed merger will provide the combined company $686 Million in capital to fund its growth strategy. This growth strategy includes “hiring, expanding monetization, and continuing to develop products to build stronger, more vibrant, and resilient neighborhoods.”

“Nextdoor has been at the forefront of cultivating ‘hyperlocal’ communities and neighborhoods since its inception, allowing neighbors to create meaningful connections – both online and offline,” said Sarah Friar, Chief Executive Officer of Nextdoor.

Nextdoor revenue forecast for 2021/22

Looking forward, the company forecasts positive revenue growth over the next two years. Firstly, Nextdoor expects to generate $178 Million in 2021, which represents a realised YOY increase of 44%. Furthermore, the company forecasts revenue to reach upwards of $249 Million by 2022, which would represent a YOY increase of 40%. If we break this down further, the Average Revenue Per Weekly Active User (ARPU) is expected to increase by 28% in 2021 and 9% in 2022. The company noted the increase in ARPU is a benefactor of potential monetization in rapidly growing international markets and potential for significant upside in multiple under-monetized products.

Summarising the Nextdoor & KVSB merger

In summary, the KVSB merger with SPAC target Nextdoor opens an exciting new chapter for the social networking service. Furthermore, the $686 Million cash injection will help fuel the companies expansion strategy. However, it is important to note that the transaction has many hurdles to vault prior to the completion in Q4. We will continue to update our viewers on any KVSB merger updates.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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