Airbnb, the popular short-term vacation rental service, is out to raise $1 billion in investment. Last April, the San Francisco-based firm raised $500 million. The company was then valued at an estimated $10 billion.
This new round of financing will value the Airbnb at $24 billion. It is more than double the company’s last valuation.
To date, Airbnb has amassed $800 million in funding from investors which include Andreessen Horowitz and Sequoia Capital.
According to the Wall Street Journal, this new funding effort is the “secret math” of Airbnb. It gives the company a far richer valuation than industry giants like Hilton or Marriott.
Airbnb’s projected revenue over 2015 is approximately $900 million. The industry’s leading hotel chains are perceiving Airbnb’s increasing popularity and growth as a direct threat to their business model. The company is battling this along with other hurdles such as insurance and state regulations.
Founded in 2008, Airbnb has hosts offering their apartments and homes for rent across 190 countries. The offerings on Airbnb’s website are in over 34,000 cities. The company has said that the number of users availing its services is over 25 million.
PrivCo’s CEO, Sam Hamadeh, said, “Everyone in [Silicon Valley] sees a narrow window to raise crazy money in the private market.” He added that everybody knows this isn’t going to last forever.
Hamadeh also said that it is smart of Airbnb to use the opportunity.
According to PrivCo, Airbnb has already raised $160 million in revenue as of March 2015. But Airbnb also lost more than $150 million over the course of 2014. According to PrivCo, the company is on its way to losing another $200 million this year.
Airbnb also faces major hurdles in key markets like New York City. In 2014, New York’s attorney general, Eric T. Schneiderman, said that almost three-quarters of all Airbnb rentals were illegal. They were violating several zoning and other laws.
The funding talks for Airbnb show the increasing interest in start-ups that are “on demand.” The increased valuation will aid the company in upending industry giants.
Airbnb will also get a ranking close to what private U.S. technology companies with highest value have. Such companies include Dropbox, Inc., Snapchat, Inc., and Uber Technologies, Inc. It will also raise the company’s worth to seven times more than the worth of HomeAway, Inc., another vacation rental website similar to Airbnb.
[Photo By: Justin Sullivan/Getty Images News]