OfferUp Raises $90M for Mobile, Local Craigslist Killer
OfferUp, a mobile-first marketplace for buying and selling things locally, revealed that it has raised $90 million in total funding, including a $73 million round earlier this year, and is conducting billions of dollars in transactions.
A would-be Craigslist killer, or at least a formidable competitor, Bellevue, WA-based OfferUp has been scrupulously quiet as it amassed an eye-popping amount of capital and a large base of customers since launching in 2011. The company says more than $2.9 billion in transactions have been completed on its platform thus far in 2015.
The timeline on its website notes a seed funding round in April of 2012 and a September 2013 Series A. In March, the company hauled in $73 million in a Series C round led by T. Rowe Price, with participation from Andreessen Horowitz, Coatue Management, Tiger Global Management, Vy Capital, High Line Venture Partners, and Allen & Company. Jackson Square Ventures led the Series A investment and Andreessen Horowitz led a 2014 Series B round, OfferUp said Wednesday.
OfferUp, founded by Nick Huzar and Arean van Veelen, describes itself as “the largest mobile marketplace for local buyers and sellers.” It’s not the only upstart that aims to take a slice of the local commerce business. Earlier this year, Xconomy reported on the growing field of Craigslist competitors including 5miles, Listia, OfferUp, and Wallapop, among others.
Craigslist, with its minimalist, static—some would say stagnant—design and (mostly) free listings that helped decimate newspaper classified advertising in the 2000s, remains a behemoth. The 20-year-old service claims more than 50 billion monthly page views from 60 million U.S. monthly users. Its 700-plus local sites are run by a staff of fewer than 50, based in San Francisco.
OfferUp already has more employees: 67, according to press reports. (Some 35 individuals are listed on its site.) It is in every major U.S. city, and its app has been downloaded more than 12 million times, reports The New York Times.
Craigslist will make about $300 million in profit this year on revenue of $381 million, derived mainly from listing fees for categories including employment, apartments, and vehicles, according to AIM Group’s estimates. So far, OfferUp isn’t charging users of its marketplace and has been mum on its plans for making money.
The Wall Street Journal reported OfferUp’s current valuation is $800 million, and, citing unnamed sources, suggested the company was looking for a valuation of $2.5 billion in recent discussions about raising more. “We are always having conversations with investors. What you are suggesting is not reflective of those conversations,” Huzar said in a statement to the WSJ.
The AIM Group also notes rising competition for Craigslist (and therefore OfferUp) from the likes of Facebook, and security and safety issues that have caused “many potential users … to use other classified sites or avoid Craigslist entirely.”
That provides competitors like OfferUp an opening. In addition to making a marketplace geared toward smartphones, OfferUp is emphasizing security and identity, with user profiles and ratings, tie-ins to existing social networks for further identity verification, and simplified communications between buyer and seller within the app. Though crimes and scams have allegedly been perpetrated by OfferUp users, too.
Now that OfferUp is seeking visibility for its service, its challenges include accelerating user growth, making good on its promise of a safer, easier local buying and selling experience, and making money on top of its marketplace.