Airbnb seeks $30bn valuation with new fundraising round

Airbnb, the home-sharing company, is seeking a new round of fundraising that would give it a valuation of $30billion, hot on the heels of a wave of investment into private start-ups.

The valuation would mark a 25 per cent increase over its previous equity fundraising, and would make it the third-most valuable start-up in the world behind Uber, the car-hailing company, and Xiaomi, the Chinese smartphone maker.

The company makes money by charging fees to users who book stays with local hosts through the Airbnb website. It has already raised more than $3billion in debt and equity since its founding eight years ago, which has helped fund its expansion to 192 countries globally.

In recent weeks investors have poured billions of dollars into start-ups such as Uber, Didi Chuxing and Snapchat, as the world's largest technology start-ups shore up their coffers in anticipation of global financial uncertainty.

However, the fundraising by Airbnb, first reported by the New York Times, will be the first big test of investor appetite for large private tech companies in the aftermath of Britain’s vote to leave the EU, a decision that has roiled financial markets.

Start-ups in the UK say they have already had trouble fundraising due to the uncertainty created by the Brexit vote, and global investors have been fleeing to safe havens such as gold and US Treasuries.

Mood swings

The mood among investors in Silicon Valley has also turned more sceptical in recent months, and the collapse of high-profile start-ups such as Theranos and Zenefits has further damped the market.

Airbnb’s move follows a wave of fundraising by start-ups, including a $7billion round of debt and equity raised by Didi Chuxing, the Chinese car-hailing company. Uber raised $3.5billion from Saudi Arabia’s sovereign wealth fund earlier this month, while Snapchat, the app known for its disappearing messages, raised $1.8billion from investors in late May.

As these private companies raise more cash, they have also been investing more heavily in their regulatory battles around the world. Earlier this week Airbnb filed a lawsuit against the city of San Francisco, its home town, in a fight over whether the company should be fined for displaying listings from hosts who have not registered with the city.

Meanwhile, Uber has faced global litigation, including a class-action lawsuit from drivers in California and Massachusetts which it settled for $100million earlier this year.

The record levels of fundraising by private companies also underscore a shift in capital markets, as investors are willing to invest ever-larger sums in them. This upends the traditional model in which private start-ups would seek a public listing when they grew to a certain point and needed to raise large sums of cash.

Last June Airbnb raised $1.5billion from investors including General Atlantic, Hillhouse Capital and Tiger Global, at a valuation of $24billion. The company also secured a $1bn debt facility underwritten by JPMorgan earlier this month, bringing its total funds raised in debt and equity to more than $3billion.

The funding raised in the current round will be used to support new investment and growth opportunities, according to a person close to the company.

Financial Times