US startup Nextdoor is coming to Germany to connect neighborhoods

Nextdoor, a San Francisco-based startup that connects neighbors through their platform, is coming to Germany. But is everyone ready to welcome them to the neighborhood?

The neighborhood is getting a bit crowded now that another hyper-local social platform for neighbors is moving to Germany. This time it is Nextdoor, a San Francisco-based startup that is launching across the country Tuesday.

The startup had been in beta mode in 200 neighborhoods across several German cities, like Dusseldorf, Hamburg and Berlin, since February 2017, explains Sarah Leary, the startup’s co-founder.

Available on desktops and mobile phones, the private network lets users exchange information about service providers, missing pets, upcoming concerts or strange activity in the neighborhood. Nextdoor also requires authentication, either via a landline phone or a mailed postcard, to verify users live in their particular neighborhood.

Backed by the same Silicon Valley capital funds that invested in Facebook, LinkedIn and Snap, the 7-year-old startup has raised $210 million (€188 million) in venture capital funding and their last round was held in 2015, giving them a valuation of $1.1 billion.

"Competition only makes it all the more interesting."

But the US startup is not alone. Germany is already home to Nachbarschaft.net, Lokalportal and Nebenan.de, a startup founded by Christian Vollmann in 2015. Vollmann’s startup offers a similar service and received backing from the Swiss venture capital firm Lakestar, the Munich-based publishing house Burda and several business angels.

The German startup also recently merged with another portal, WirNachbarn, to strengthen its position as "the clear market leader," Vollmann tells the Heureka. Nebenan.de is active in 3,200 German neighborhoods and has more than half a million active users, the CEO shares.

"We do not think this will change much going forward," Vollmann says when asked what Nextdoor’s arrival means for business. He explains that Nextdoor's services are not tailored towards German users' needs, emphasizing privacy and data protection standards.

"Nextdoor.de is run from Ireland," meaning the company adheres to different data protection standards (German) than those in Germany. In contrast, Nebenan.de – as a German legal entity – does, he continues. Both Nextdoor and Nebenan.de must adhere to EU data protection legislation.

iPhone_NearbyNeighborhoods-nextdoorThe CEO also says that "Nebenan.de differentiates itself through a strong social impact focus. The network is about helping, sharing and gathering around local social causes." According to Vollmann, Nextdoor's focus is more heavily on safety, security and neighborhood watch. "Something that is not very relevant in Germany," he says.

However, information provided by Leary shows that 32 per cent of Nextdoor’s users post classifieds, 24 per cent ask for recommendations and only 10 per cent are posting about safety or security.

The co-founder says that Nextdoor is not coming to Germany with the intention of beating out similar startups. They want a “grassroots” approach, that builds their community through people, not through acquisitions.

"We're very focused on our product and on our community building," Leary tells the Heureka. "We think that's a recipe for success."

In February 2017, four months after Nextdoor launched in the UK, they gobbled up their competitor Streetlife in "a multi-million pound acquisition," a Nextdoor press release says. In an interview with the Heureka, Leary shares that Streetlife made the decision to close its doors prior to the acquisition.

Nebenan.de's Vollmann seems unphased: “We will continue to build Germany's leading social network for neighbors. Competition only makes it all the more interesting.”

Monetizing with local advertisements

Nextdoor is not yet profitable. The startup first started testing out ways of monetizing the platform in the US nine months ago, Leary shares. The direction the advertisements can go is still open: real estate listings and in-feed posts featuring local businesses are two of several ideas the startup would like to test.

With more than 160,000 neighborhoods using the platform across the US, the UK and the Netherlands, there is a lot of interest in finding ways of monetizing. In an interview with Adweek in early 2017, Nextdoor's CEO Nirav Tolia, says it forecasts "$1 billion by 2020," in revenue.

For now the version offered in Germany will be ad free, Leary says. "When the time is right we will focus on monetization," she says. And emphasizes: first product, then community.

Photo credit: Nextdoor

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