OfferUp to raise $120 million – WSJ
05 Aug 2016
The Wall Street Journal (WSJ) reported that general classifieds app OfferUp is set to raise $120 million U.S., led by private-equity firm Warburg Pincus. That would be on top of the $90 million it has already raised from big name investors, including Andreesen Horowitz and Tiger Global Management.
The new investment, if the Journal’s report is correct, would bump OfferUp’s valuation from $70 million U.S. two years ago to $1.2 billion U.S. now.
The new money is intended to help OfferUp compete with rival Letgo, which raised $100 million U.S. last year from South African-based internet and media powerhouse Naspers, to expand Letgo from its home base of Barcelona to the U.S..
Letgo has been advertising heavily and in May merged its U.S. operations with fellow Spanish classified app Wallapop. (The two will use the Letgo brand in the U.S.)
That led at least one analyst to suggest that EBay ought to acquire OfferUp as a way of competing more effectively in the rapidly heating up classified apps space. (EBay already has its own classified app, namely Close5.)
The potential new OfferUp funding appears to put such speculation to rest.
The Journal article also discussed whether the new apps can dislodge Craigslist, which it said “appears vulnerable in the smartphone era,” with its minimalist website and reliance on third-party apps. The Wall Street Journal quoted AIM Group’s analysis that Craigslist generated sales of $381 million U.S. and a profit of $300 million U.S. in 2015.
OfferUp was founded in 2011 by Nick Huzar and Arean van Veelen, and is based in Seattle. The app is free for users (at least for now).
OfferUp’s U.S. traffic has nearly tripled over the past year to 12.6 million users, according to ComScore. However, Letgo nearly matched OfferUp, with 12.1 million U.S. users in June. Research firm App Annie says Letgo’s IPhone app ranked sixth in downloads in the shopping category, behind fourth-ranked OfferUp.
Letgo investor Fabrice Grinda told WSJ he thought Letgo investor Naspers “will spend whatever it takes to win.” OfferUp apparently is not willing to cede the top spot just yet, and is doing the same.
Craigslist – are you watching? What’s your next play?