OfferUp — one of the Seattle area’s most valuable, secretive and fastest growing startups — announced more than $90 million in total funding on Wednesday as the online marketplace for buying and selling goods comes out of its shell and talks about itself for the first time.
Of that total raised, $73 million came from a series C round that quietly closed in March of this year. That investment was previously reported by GeekWire, but now it’s confirmed that OfferUp brought in one of the Seattle region’s largest venture rounds of the year.
The Craigslist challenger has quietly amassed an empire over the past four years without doing press interviews or releasing any kind of fundraising or usage statistics — until now.
The Bellevue company connects buyers and sellers looking to unload or purchase everything from sewing machines to sofa beds.
And so far this year, OfferUp says that its users have sold $2.9 billion worth of merchandise on the platform. That means it has grown fivefold over the past 10 months and is now one of the largest mobile marketplaces.
Meanwhile, OfferUp’s free Android and iOS app has grown well beyond Seattle. It is now available in every major city across the U.S. — with plans to go international. OfferUp ranks No. 56 overall in the iTunes store, above other free apps from brand names like Groupon, eBay and Lyft.
While those numbers may sound impressive, the company has yet to make any significant money, choosing hyper growth over profits.
“It’s obviously a little scary, big valuation no monetization,” admitted OfferUp investor Josh Breinlinger, managing director at Jackson Square Ventures. “It’s easy to throw up the bubble flag.”
But Breinlinger says that OfferUp is different.
“We’re not built on any other platform,” he said. “We own all of the usage, we own billions and billions of dollars of transactions. We can monetize that.”
Display advertising, featured listings or in-app payments could help turn those free users into profits, he says.
“I think we’re only a couple years away from OfferUp being one of probably the four or five largest commerce brands in the U.S.,” Breinlinger added. “They’ll be in the company of Amazon and eBay and Craigslist and Apple. That’s kind of it.”
Even given a chance to hedge such a bold prediction, Breinlinger said he’s backed a lot of marketplaces and he’s pretty confident that’s where OfferUp is headed.
Andreessen Horowitz partner Jeff Jordan, who’s firm has backed companies like Twitter, Facebook and Airbnb before investing in OfferUp a couple of years ago, called it “among the fastest growing marketplaces we have ever seen.”
OfferUp still isn’t disclosing its valuation, but it is certainly hefty.
The company was widely rumored to be Seattle’s only unicorn, or private company valued above $1 billion, when it raised its most recent funding in March. (Previously on GeekWire: Seattle’s next $1B startup? Inside this secretive company’s bid to unseat Craigslist)
OfferUp CEO Nick Huzar wouldn’t comment on the company’s valuation or supposed unicorn status, but he did say the number of transactions on OfferUp have grown nearly 500 percent since the last funding round. He did not specify how many people are using the apps.
Founded in 2011, OfferUp was started by Huzar and co-founder Arean Van Veelen who struggled to find ways to unload household items that had accumulated in their homes. From that simple idea, OfferUp has grown significantly, one of the reasons why the company was chosen this week as one of the Seattle 10 companies to be honored at this year’s GeekWire Gala.
View from the Inside
You can see OfferUp’s progress before you even walk into its Bellevue headquarters.
Through the front door, you’re greeted with rows of coders stacked on top of each other and wide open spaces that the company says it will be filling before long.
OfferUp employed just 15 people one year ago. Today, it employs 67, with room to grow. It just doubled the size of its office this week, located in a nondescript office park in southwest Bellevue that Huzar likes to call “the swamp” because of a nearby waterway.
On a recent tour, Huzar showed a wall that was torn down, making room for even more staffers. Huzar says he’s even surprised by the rapid growth. The company holds all-hands meetings on Monday mornings, and OfferUp co-founder and CTO van Veelen said every week there’s at least one new person to introduce.
The company built the business with very little marketing or advertising. And next to no PR.
“Word of mouth is kind of a hard thing to model. It just kind of starts to happen,” Huzar said. “Everywhere I go people use OfferUp. That’s great, but does anybody really know how big it is? That’s kind of why we want to come out and say a few things now. So people can actually realize. I bet most people will say, ‘Yeah, I knew.’”
Asked why he kept things quiet for so long, Huzar said they were “just too busy keeping servers and things running.”
A Craigslist Killer?
OfferUp is certainly a Craigslist competitor, but Huzar explains he doesn’t think it needs to be a Craigslist killer.
Instead, he wants to expand the market, tapping new customers who may have been turned off by the minimalist design of Craigslist or never tried it in the first place.
One way OfferUp hopes to win new users is by focusing on mobile, which Huzar said is faster, easier and safer.
In his view, the company does not need to steal users from Craigslist in order to survive. It just needs to convince a new generation of mobile users to try OfferUp to sell the junk in their garages or basements.
Even when OfferUp started to see traction, Huzar said skeptics piled on because it’s not the first company to take on Craigslist.
But Huzar has heard the critics before, including many investors who passed on OfferUp early in its history.
“I think the biggest difference was the smartphone,” Huzar said. “I think historically a lot of companies competed with Craigslist for over 20 years using the same type of tools. And then the smartphone comes along and that’s all antiquated now. We can look at the space in a completely different way and I think for some people that resonates, for some people they still get caught up with what’s been done in the past.”
OfferUp’s investor list now includes a number of Seattle angels as well as venture firms like Andreessen Horowitz, Jackson Square Ventures, T. Rowe Price Associates, Coatue Management, Tiger Global Management, Vy Capital, High Line Venture Partners and Allen & Company.
Editor’s note: OfferUp is a GeekWire annual sponsor.