Airbnb In Advanced Talks to Raise Funding at a $10 Billion Valuation

Airbnb In Advanced Talks to Raise Funding at a $10 Billion Valuation
Private-Equity Firm TPG Likely to Lead Funding Round for the Online Home-Rental Marketplace
EVELYN M. RUSLI and DOUGLAS MACMILLAN
Updated March 20, 2014 9:21 a.m. ET
Airbnb Inc. is in advanced talks to raise funds that would value the online home-rental marketplace at more than $10 billion and place it among the world’s most valuable startups, according to several people familiar with the process.

Private-equity firm TPG is likely to lead the round, which could total between $400 million and $500 million, said two of the people.
At $10 billion, Airbnb would be valued more highly than some large hotel operators with which it competes. Wyndham Worldwide Corp. WYN -0.35% , which manages 7,500 hotels under the Wyndham, Ramada and other brands, has a market value of $9.4 billion.Hyatt Hotels Corp. H -0.31% is valued at $8.4 billion.
The Billion-Dollar Club
The Journal and Dow Jones VentureSource aretracking companies that are valued at $1 billion or more by venture-capital firms. The club is becoming less exclusive as venture capitalists funnel large sums of capital in the best startups. Today there are more than 30 such companies in the U.S., Europe and China. Click on the names below for company profiles, or sort by categories such as region, amount raised and valuation.
Founded in 2008, Airbnb allows individuals to rent out couches, rooms, apartments and homes through an online marketplace of more than 600,000 current listings. Hosts set a nightly rate, and Airbnb collects guest payments, keeping a portion of the fees for itself. The company hasn’t disclosed revenue or profitability.
The service has become a cheap alternative to hotels for millions of tourists, a source of income for homeowners and a target for regulators wary about safety, oversight and tax collections.
Last October, New York Attorney General Eric Schneiderman subpoenaed Airbnb for information on its 15,000 hosts in the state, to determine if any are violating a 2010 state law that prohibits renters from subletting their homes for less than 30 days if they’re not present. The company is contesting the order in court. Hotel operators argue that the rentals unfairly skirt lodging taxes.
Airbnb is benefiting from soaring investor interest in mobile and Internet-based business models, which is propelling a wave of initial public offerings and eye-popping valuations for private companies. Facebook Inc. FB -1.35% recently agreed to acquire closely held text-messaging service WhatsApp for $19 billion.
In the past 12 months, at least 21 companies have raised new funds that valued them at $1 billion or more. At the top of that list, online-storage provider Dropbox Inc. and Chinese mobile-phone maker Xiaomi notched $10 billion valuations, while data-mining specialist Palantir Technologies Inc. was valued at $9 billion. Uber Inc., an on-demand car service, is valued at $3.8 billion, following an investment last year led by Google Ventures, with TPG participating.
Airbnb and Uber are part of the so-called sharing economy, in which people offer resources or services, such as cars, spare bedrooms, or extra time, to others for a fee. The companies need investments to expand into new regions, staff international offices and ward off competitors. One of Airbnb’s largest competitors is vacation-rental serviceHomeAway Inc., AWAY +0.95% a public company valued at $3.9 billion.
Airbnb’s valuation has quadrupled since it raised funds less than two years ago, a period in which the company expanded its rental service to more than 160 countries.
Airbnb last raised funding at a valuation of $2.5 billion in 2012, from venture-capital investors including Peter Thiel’s Founders Fund, Andreessen Horowitz and Sequoia Capital. Before the current talks, the company had raised more than $300 million. It received a $600,000 seed investment from Sequoia in 2009, and the next year raised $7.2 million in a round led by Greylock Partners.
Airbnb co-founder and Chief Executive Brian Chesky wants to expand the service beyond room rentals by adding more hospitality services. Earlier this year, for instance, Airbnb began testing a cleaning service for hosts in certain neighborhoods in San Francisco and New York. Last fall, it hired Chip Conley, the founder of Joie de Vivre, a boutique hotel chain, to lead an effort instructing the company’s 350,000 hosts on the finer points of hospitality.
“We are actively looking to build specific services,” Mr. Chesky said in an interview with the Wall Street Journal in January. “We need to offer more.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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