by Gugu Lourie
Africa’s Internet Giant Naspers’ R1.4 billion gamble into US-based second-hand marketplace app Letgo is an investment that many may have concluded that it makes little sense when it was done by this unknown company from South Africa.
When the deal was done Letgo’s competitors Craiglist and eBay were not worried about their market share in the tough US market.
But things seem to be working out for Naspers – Letgo has reached 20 million monthly active users of its marketplace and 45 million downloads of its free app since launching in 2015, making it one of the fastest growing technology startups globally.
That performance has prompted Naspers to invest more in the US-based second-hand marketplace app Letgo.
Following good growth, Letgo raised R2.4 billion ($175 million) in its third funding from Naspers, Accel, Insight Venture Partners, New Enterprise Associates, 14W and other investors.
This brings Letgo funding to R5.1 billion ($375 million) to date.
The company will also soon revealed it will top R311 billion ($23 billion) in annual user transactions (gross merchandise value of items sold) in the next six months.
The cutting-edge marketplace also disclosed that its active user base grew 359% in 2016 while total items posted daily by sellers increased by over 960%.
The new funding will be utilised by Letgo to accelerate U.S. and international growth, and to boost its already significant investment in areas such as artificial intelligence and image recognition.
“Letgo has caught on faster than any of us could have anticipated, but our goal remains much bigger – to build the largest secondhand marketplace in the world,” said co-founder Alec Oxenford. “This new funding will bring us much closer to that vision. We are powering a fast-expanding second-hand economy that benefits not just buyers and sellers, but also the environment. Letgo already helps tens of millions of users globally think used before they think new.”
The growth through acquisitions and investments into strategic internet platform is to ensure that Naspers improve and diversify its revenue generation away from one big source, Tencent’s contribution. This will help Naspers deal with the market perception that it’s a one trick pony relying on Tencent.
Naspers CEO of Classifieds, Martin Scheepbouwer, believes that letgo is the most significant threat that incumbent secondhand marketplaces have faced.
“Letgo’s early growth is unprecedented for this type of platform and it’s clearly tapped into an enormous consumer demand for a better way to buy and sell locally. In a short time, it’s become a massive marketplace used by tens of millions of buyers and sellers. And its growth has only been accelerating.”