The sharing economy startup market is getting even hotter.
Airbnb just completed one of the largest funding rounds ever according to various reports. The online home-rental service company reportedly raised $1.5 billion, giving them a $25.5 billion valuation.
Yahoo Finance’s Aaron Task thinks that the new round of funding makes the possibility of an IPO less likely for the company right now.
“Airbnb would be going public in a different era. If this was fifteen or twenty years ago, Airbnb would have already been public. Now you have all this private money out there,” he notes. “The bankers are getting involved and helping to put the Airbnbs of the world in touch with private equity funds and pension funds and mutual funds as well, who are investing in these private offerings, and so they can continue to be private for the foreseeable future. They don't need to go public now because they're able to raise a tremendous amount of money at a very healthy valuation.”
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Airbnb’s new lofty $25.5B valuation makes it worth more than hotel giants Marriott (MAR), Starwood (HOT), and Wyndham (WYN).
However, Task points out some big players in the industry are not worried about Airbnb's growing dominance in the hotel industry.
“Actually last week Andy Serwer, our boss, interviewed Barry Diller, whose company owns Expedia (IACI). He was asked about Airbnb and he said, We're watching very carefully. They're growing very fast, but we don't think it's really a threat to the traditional industry because some people want all the services you get at a hotel."
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Airbnb has grown very quickly since it was founded in 2008 with more 1.2 million listings of homes, apartments and rooms worldwide. But one of the growing pains Airbnb has to deal with is regulatory risks.
“It's very similar [to] what's going on with Uber. Uber faces a tremendous amount of regulatory challenges, yet it continues to plow ahead at a very rapid speed of expansion, trying to make itself the dominant player in that market. Airbnb is doing the same thing,” according to Task. And this latest round of financing is going to enable them to cement themselves even further as the leader in this marketplace. The big reason why investors don't care about these regulatory issues is the rate of growth."
Airbnb had $250 million of revenue in 2013 and it's expected to be $900 million this year, rising to $10 billion by 2020, according to the Wall Street Journal.
Airbnb's latest round of financing is being led by U.S. private equity firm General Atlantic, and also includes Beijing-based Hillhouse Capital Group and Tiger Global Management.
And Airbnb is not alone. The more upscale version of Airbnb is also raising its own round of funding. London startup onefinestay celebrated its five year anniversary today by raising $40 million in financing.
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