OfferUp’s technology is designed to make it easy for smartphone users to post items for sale on its site. A long line of high-powered investors are betting it’ll be successful.
A Bellevue startup that aims to take on Craigslist announced Wednesday it has raised one of the region’s largest financing rounds of the year.
OfferUp, founded in 2011 by Nick Huzar and Arean van Veelen, closed a $73 million series C round in March led by T. Rowe Price Associates, but only disclosed it this week. The company has raised $90 million in its four-year life.
The idea behind the company is to make a Craigslist-type platform for buying and selling things locally, but make it more easy to use and safer. Huzar and van Veelen took months to talk to people and found that most had bought something from Craigslist but had avoiding selling.
That was Huzar’s own experience. He cleaned out a cluttered room in his house to make room for a nursery for his new baby but felt daunted by the task of photographing and selling everything in the room.
Most Read Business Stories
- The latest pricing glitch spooked Vanguard shareholders | Your Funds
- Retail survivors: How four family-owned Washington shops have made it in the Amazon era
- I shared my phone number. I learned I shouldn’t have.
- Southwest, a stalwart Boeing 737 MAX customer, eyes other jets
- Zombie debt: how collectors trick consumers into reviving dead debts
The issue is time, Huzar said. People find Craigslist clunky and uploading photos to the site takes too much time, Huzar said. With OfferUp, sellers can take a photo with their smartphones and upload it to the site almost immediately. The app also includes messaging capabilities and, to increase safety, reviews of sellers.
Users can also opt to provide OfferUp with a scan of their driver’s license and connection to their Facebook pages, which earns them a small badge on the site. The badge is meant to alert buyers that OfferUp has verified the full name of the seller.
None of this would have been possible a few years ago, Huzar said. But now that a great majority of the population has a smartphone, the idea is poised to take off.
“The beauty of the smartphone shift is you can take a picture and in seconds make the item discoverable online,” he said.
Huzar and van Veelen worked together at Konnects, a social-media site for newspapers and magazines. Huzar also served as CEO of local deals site Deal Springer just before starting OfferUp.
Like Craigslist, OfferUp is focused on connecting buyers and sellers who live in the same area. The company has no interest in getting into shipping or distribution, Huzar said.
The startup isn’t the only one trying to create a more modern Craigslist; Facebook is also testing a marketplace.
OfferUp has elements of a social-media site as well. The app looks a little like Pinterest, with items nearby showing up as a scrollable list of pictures.
A multitude of high-profile firms participated in the latest round, including Andreessen Horowitz, Coatue Management, Tiger Global Management, Vy Capital, High Line Venture Partners and Allen & Co. That’s a long list of firms willing to invest before the company even has revenue.
OfferUp claims $2.9 billion in transactions have been made using the service since January, but the company isn’t catching any of it yet. The company declined to discuss plans to make money.
Andreessen Horowitz partner Jeff Jordan joined OfferUp’s board, calling the company in a statement “among the fastest growing marketplaces we have ever seen.”
At first, investors seemed a bit skittish to try to take on Craigslist, said Josh Breinlinger, managing director of investment firm Jackson Square Ventures, which invested in OfferUp two years ago. But Huzar was able to show the idea was taking off.
“Even early on, with a tiny number of users, he was able to show he was able to get people to post items and they sell, and they sell fast,” Breinlinger said. “And every week, a higher percentage sell.”
Operationally, OfferUp itself is also growing quickly. The company had 15 employees a year ago and now has 67 in its Bellevue headquarters. The team is expanding its space, furnishing the entire office with items purchased on OfferUp.
OfferUp has launched across the U.S. and will eventually be available internationally, Huzar said.