Airbnb closes in on $400 million in next funding round
This will give a valuation of $10 billion and price the company at $2 billion more than InterContinental Hotels, the Financial Times reported.
Worth just $2.5 billion after its last round two years ago, the sharp rise in Airbnb’s valuation to $10 billion is seen by supporters of the ‘sharing economy’ as a big endorsement of a new business model.
San Francisco-based Airbnb had early success in cities such as New York and London, thanks to a combination of lower prices than hotels and the promise of a local’s guide to the area. Now, it is looking beyond western metropolitan destinations.
The company, which takes a commission on every booking made through its site, has never disclosed its revenues or profitability.
This has raised increasing concerns that a dangerous bubble is building in the valuations of technology start-ups, the newspaper reported.
Founded in 2008 by roommates who rented out beds to help pay for their San Francisco loft, Airbnb said at the end of last year that it has hosted more than 11 million guests in 34,000 cities around the world.
Airbnb is the latest private technology firm to seek private equity funding that will allow it to delay an initial public offering. The deal was earlier reported by the Wall Street Journal.
The company is raising more than $400 million to help expand its peer-to-peer home renting marketplace into a broader offering of “hospitality”, including transport or cleaning services, said co-founder Brian Chesky, now chief executive.
TPG, the private equity group that also led sharing-economy rival Uber’s fundraising last year, will lead the Airbnb investment, according to sources close to the discussions, the FT reported.
Travel was one of the first industries to be transformed by e-commerce during the first dotcom boom. Although some pioneers such as lastminute.com have fallen far below their peak valuations, travel remains a popular sector for technology investors and entrepreneurs, the FT said.
HomeAway, another vacation rentals site that also owns Airbnb rival VRBO, went public in 2011 and has a $3.9 billion market capitalisation on Nasdaq.