SAN FRANCISCO Neighborhood social network start-up Nextdoor has raised another $21.6 million, even as many investors shy away from the sector in the wake of troubled Facebook initial public offering last year.
The new funding includes $15 million from Greylock Partners, whose partner David Sze will be joining Nextdoor's board. Sze, known for his involvement in networks LinkedIn and Facebook in their earliest days, said he has never before invested so much in a single investment round.
The investment showed many investors still have plenty of cash for social networks, provided they are tapping a niche where users get deeply involved and where a path to profitability is emerging.
"That is the next phase," Sze told Reuters, talking about a generation of more specialized networks that have come after early networks like Facebook built broader networks that introduced consumers to the concept. "There's less huge opportunities, but there's more point opportunities."
Nextdoor, which launched in late 2011, is now in 8,075 neighborhoods around the United States, with plans to expand overseas. It links communities of neighbors in private networks.
"It's people who have roots," said chief executive Nirav Tolia about his members in any given neighborhood. "They either own property, have families, or are on their way to owning property or having families."
Members post Facebook style, giving or seeking recommendations for services such as babysitters and yard maintenance or local retailers and restaurants. They also post about community issues such as parking; crime and safety; or items for sale or loan.
The funding comes as other versions of social networks --including private social network Path, question and answer service Quora, and influence-measuring service Klout -- haven't been able to gain serious traction among users, despite raising tens of millions of dollars.
But Nextdoor is different, Sze says, because of the trust it has built among its users, the rapid pace at which it is growing, and the potential to make money down the line, even if the exact mechanism remains nebulous.
"If you squint and think about it, you can draw the line to where monetization is possible," Sze, who will join Nextdoor's board, said. "Whether that is advertising or coupons or review lifting, who knows."
Tolia believes the service will become "the next generation of yellow pages," tapping into what he said was a $100 billion local advertising market.
New investors Google Ventures and Bezos Expeditions, Amazon chief Jeff Bezos' venture fund, participated in Nextdoor's latest funding round. So did existing investors Benchmark Capital and Shasta Ventures.
Nextdoor has raised a total of $40.2 million.
(Editing by Richard Pullin)
(This story was corrected to fix total sum raised to $21.6 million instead of $21.3 million in headline and first sentence)