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Investors Are Drooling Over Two New Craigslist Competitors. One Might Raise $100 Million.

OfferUp, an app that's like Craigslist meets Pinterest, could soon have a valuation of more than $500 million.

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Two little-known online marketplace startups, OfferUp and VarageSale, have secretly raised money from two of the biggest names in venture capital — Andreessen Horowitz and Sequoia Capital — and they’ve been trying to stay under the radar as they go head to head in building what they hope will be Craigslist killers.

OfferUp, based in Seattle, and VarageSale, based in Toronto, both make mobile apps that people use to quickly buy and sell stuff from other people who live in their towns.

Imagine the kind of random stuff you find on Craigslist — sneakers, a couch, a dress — but displayed in a much more visually appealing way, as a stream of photos instead of text. Each site also makes it very simple to list items for sale, especially from a smartphone. This approach has been attractive to a set of investors who believe the young companies could eventually be poised to challenge Craigslist, and maybe even eBay, according to multiple sources.

And more investors are lining up. OfferUp is in the process of raising an investment round that could fetch between $60 million and $100 million and value the company at well over $500 million, according to people familiar with the matter. The round is also expected to include a secondary sale whereby new investors buy shares from some early employees, one of these people said. (If you have more information on this deal, please email me at jason@recode.net.)

The startup, led by CEO Nick Huzar, previously received a Series A investment led by Andreessen Horowitz. Neither party has disclosed that publicly and Huzar and a spokesman for Andreessen Horowitz declined comment.

VarageSale, which organizes items into moderated geographic communities, has also raised a Series A investment led by Sequoia Capital. Both VarageSale CEO Carl Mercier and a Sequoia spokesman declined to comment.

So why are investors chasing after these companies? Both apps are seeing unbelievable growth in both users and items sold, according to people familiar with the companies. OfferUp, for example, has consistently ranked in the Top 10 free shopping and lifestyle apps in the Google and Apple app stores, respectively, over the past few months.

But the companies still don’t generate any revenue, which means investors are currently placing their bets on each company’s user growth and in the value of items sold. Neither service has made any serious attempt to bring in meaningful sales and instead has focused on growing their user bases, sources say. The apps are still a work in progress — neither have the ability to broker transactions, and the buyers and sellers often have to exchange money in person.

The apps also don’t charge for listing items, but that could change in the future, even if it could stunt growth. The companies could also decide to allow for purchasing on their own platforms, charging the sellers a percentage of sales. EBay, Amazon and Etsy all employ such a model on their giant marketplaces.

This article originally appeared on Recode.net.