Room sharing pioneer Airbnb to join $10bn club

Another day, another crazy Silicon Valley valuation. This time it's shareconomy poster child Airbnb...

by Andrew Saunders
Last Updated: 24 Oct 2014

The website, which matches up travellers and people with rooms to rent, is reportedly close to securing a private fundraising at a valuation for the whole business of $10bn.

That would make it more valuable than either Hyatt ($8.4bn) or IHG ($8bn), despite the fact that both these firms have substantial international networks of physical assets (hotels to you and me), while Airbnb doesn’t own so much as a single bed.

It also makes Airbnb the joint most-valuable VC backed start up on the planet, alongside Dropbox and Chinese smartphone biz Xiaomi, despite the fact that the firm has never disclosed either its revenue or profits. Co-founders Brian Chesky, Nathan Blecharczyk and Joe Gabbia - who started the firm only six years ago in San Francisco - will become the sharing economy’s first paper bilionaires.

The funding round is expected to net between $400m and $500m, and is being led by TPG (the private equity group behind car-sharing outfit Uber’s fundraising last year). Airbnb, which claims to have hosted over 11m guests since it began, is expected to use the money to expand into peer-to-peer cleaning and transport services.

Given that the firm’s last fundraising two-and-half years ago valued it at a mere $2.5bn, this new round is being seen as a major endorsement for the sharing business model. (Read MT's recent feature on the business of sharing).

But novel and thrifty as it is, this modus operandi is not without perils, as a steady stream of punter horror stories attest. Take this one from the Sydney Morning Herald about an airbnb rental in New York used to host a ‘sex freak party’, resulting in eviction and a bill for $87,000 for the apartment’s hapless tenant.

Such glitches aside, the valuation - coming as it does only a month after Facebook paid $19bn for WhatsApp - will certainly add to fears that a big bubble is inflating in the tech sector. If and when it bursts, it won’t just be the shareconomy that feels the pain…

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