Online classifieds app OfferUp has handled billions of dollars in transactions, but it has no revenue.
Slow and steady wins the race is infrequent advice in Silicon Valley. But for one startup, the road to millions of users and billions of dollars in transactions has taken four years.
OfferUp, a Craigslist-like app that lets you buy used products from people near you, is defying the sprint mentality. It has grown steadily, its executives say, and has landed significant funding along the way.
Former Microsoft employee Nick Huzar and engineer Arean van Veelen founded OfferUp in 2011 after becoming frustrated with selling items on existing online classifieds like Craigslist. Huzar explains that there were no apps at the time that took advantage of mobile phone technology like the ability to quickly take a photo of an item and post it.
Many had tried to recreate Craiglist’s success. But they didn’t succeed in pulling it off.
“We wanted to do the same thing for gently used items that Amazon did for frictionless shopping,” Huzar said in an interview with Fortune.
Similar to Craigslist, OfferUp’s premise is simple. Sellers take a photo of a used couch, lamp, or dress, add a location, and post it for others who have the app to see. Buyers can search for items close to where they are, or filter by price, and message sellers to meet in person.
Buyers can pay for items through the app. Or they can pay with cash when they pick up the item.
Currently, OfferUp doesn’t charge for listings or successful transactions, Huzar says. He declined to reveal any specific plans for charging fees, but he said they are exploring options.
Huzar said growth has been steady in terms of the number of app downloads and usage over the past three years. But in 2015, growth picked up significantly. This year alone OfferUp has handled $2.9 billion in total transactions through the app, the company said. Transactions have grown fivefold since January, and the company has seen 12 million app installs (but declined to reveal exact usage numbers).
To date, OfferUp has raised $90 million in funding, with the most recent round of $73 million coming in March. T. Rowe Price led the round, with participation from Andreessen Horowitz, Coatue Management, Tiger Global Management, Vy Capital, High Line Venture Partners, and Allen & Company.
According to the Wall Street Journal, OfferUp’s last valuation was around $800 million. The company declined to comment to Fortune about its valuation.
“OfferUp’s growth is truly remarkable—it is among the fastest growing marketplaces we have ever seen,” said Andreessen Horowitz partner Jeff Jordan.
Despite OfferUp’s growth, the app has yet to make any revenue. This differs from Craigslist, which charges $25 to $75 to post job listing in a handful of U.S. cities. And of course, Craigslist has a massive head start on the company with a huge base of users and wide selection of items for sales, services, and job listings.
Many have tried to unseat Craigslist, but few have actually been able to when it comes to being a marketplace for everything from furniture to even cars. Clearly, the company’s next challenge will be living up to its near billion dollar valuation while making actual revenue.
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