Marketplace app Letgo raises $175 million in quest to take on Craigslist
Secondhand marketplace app Letgo just got a big boost in its quest to become the Craigslist of the smartphone era.
The e-commerce company announced Tuesday that it has raised $175 million in its third major funding round following a year of breakneck growth.
The sum brings the startup's total investor backing to $375 million, including money raised from a previous round and a merger with rival Wallapop last year. The company declined to reveal its resulting valuation.
SEE ALSO:Yes, there are legit ways to make money without leaving your houseLetgo aims to bring a mobile-friendly, millennial-geared touch to localized used-good listings, a space currently dominated by Craigslist.
Users can negotiate prices or coordinate transactions by way of a built-in chat feature that the company insists is less cumbersome than phone calls or emails. The app also uses proprietary photo-recognition software to identify and categorize items in images, taking some of the hassle out of the selling process.
"It's very, very different -- the whole search, the whole browsing, the whole chatting is very different from what you see in other categories," co-founder Alec Oxenford told Mashable.
The company is far from the only startup to attempt this type of mission, though, and none of the dozens of challengers who've tried have managed to reach the massive user numbers needed to take on established players.
But Letgo claims to be in the midst of an impressive growth spurt in that regard.
Since its inception in May 2015, the company says its app has racked up more than 45 million downloads and now sports an active monthly user base of 20 million people -- a 356 percent increase from last year. The total amount of money that's changed hands within the platform is nearing $23 billion, and the average number of items posted daily has shot up 960 percent in the past year.
Users have also collectively sent more than a billion chat messages within the app.
Oxenford credits the company's substantial marketing spend, as well as word-of-mouth spread for fueling the explosive growth.
He says the chat tool has proven particularly successful amongst the company's young audience, an age bracket that generally prefers instant messaging to calling and emailing.
"Previously people thought the key to increasing liquidity in marketplaces was very detailed descriptions -- if a buyer saw a very long description that answered all the questions they could possibly have, then they'd be more inclined to buy the thing," Oxenford said. "The truth is long descriptions bore most people because for almost everybody, a large part of the description is irrelevant...The best way to get information is just to ask for it."
The additional funding will go towards more marketing efforts, U.S. and international expansion and investment in proprietary technology.
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