OfferUp, a top app for online and mobile marketplaces, announced this morning that it will raise $ 120 million in a new round of financing led by the majority investor in competing marketplace Letgo, the OLX Group, and others. As part of the transaction, OfferUp will also take over letgo’s classified business with the OLX Group 40% of the shares in the newly merged company.
Other investors in the new round are existing OfferUp Supporters Andreessen Horowitz and Warburg Pincus. The funds will be used for continuous growth, product innovation and monetization, says OfferUp.
The round ends with the completion of the acquisition, which is expected to take place in May. OfferUp has raised $ 380 million to date.
The acquisition will make two of the largest third-party buy and sell markets – outside of Craigslist, eBay, and Facebook Marketplace, of course – a greater threat to established companies. Together, the new company will have more than 20 million active users per month in the United States. For consumers, the deal means that they no longer have to list as many apps if they want to sell household items, electronics, furniture or whatever else they want to unload.
“My vision for OfferUp has always been to build a company that helps people make contacts and succeed,” said Nick Huzar, CEO of OfferUp, in a statement on the acquisition. “We combine the complementary strengths of OfferUp and letgo to offer our communities an even better buying and selling experience. The OLX Group has unprecedented know-how and clear success in growing online marketplace business. You are a great partner because we continue to create the most comprehensive, simple, and trustworthy experience for our customers. “
OfferUp also admitted that the middle of the pandemic is an unusual time to announce such a deal – especially at a time when the COVID-19 outbreak affects its own employees, partners, and the buying and selling community itself. And it will stay that way for some time.
However, Huzar positions the deal as one that enables the company to grow despite its current state.
“This news helps us continue to innovate and grow despite these challenging times and to keep that promise,” said Huzar in a company blog post.
The Apps OfferUp and letgo remain separate experiences for the time being, and there are no sales disruptions. For the time being, consumers can also download apps on iOS and Android devices.
Soon, both groups of users will have access to a larger network of buyers and sellers, along with nationwide shipping options, as well as trust and security issues. We know that this means that users of both apps can see more posts and interact with more buyers and sellers. Therefore, a kind of merging of the two networks plays a role here. There will be further changes to improve the user experience for all users in the future, but the company does not release details today.
Let go brings an app with more than 100 million downloads worldwide to the table, giving the opportunity to reactivate some of the expired users who are not currently buying or selling in their market. The two apps were often on par in terms of their App Store category rankings, although OfferUp had a slight lead on the iPhone. (See the App Store and Google Play charts below.)
However, letgo’s business outside of North America is managed and operated separately as part of the OLX group, the companies say.
“Letgo and OfferUp have always shared the same core vision of how big America’s second-hand economy can grow – using technical innovations to have a tremendously positive impact on consumer wallets and the environment,” said Alec Oxenford, co-founder by letgo. “Bringing our apps together brings us much closer to this vision,” he added.
The deal is still subject to regulatory approval. When this is the case, OfferUp’s combined businesses are headquartered in Bellevue, Washington. Huzar will continue to be CEO of OfferUp and CEO. In the meantime, Oxenford will join the board and act as senior advisor for the OLX Group and Prosus.
With the deal still pending, companies can’t talk to team changes, including potential layoffs due to overlapping positions or other layoffs.