Airbnb prepares for check-in at Silicon Valley’s $10bn club

Airbnb is set to join Dropbox and WhatsApp in Silicon Valley’s $10 billion valuation club with a private fundraising that will price the home-rental site at $2 billion more than the InterContinental hotel chain.

Worth just $2.5 billion after its last round two years ago, the sharp rise in Airbnb’s valuation to $10 billion is viewed by supporters of the sharing economy as a big endorsement of a new business model.

It also comes amid concerns that a bubble is building in the valuations of technology start-ups. Airbnb, which takes a commission on bookings made via its site, has never disclosed its revenues or profitability.

Its fundraising follows Facebook’s acquisition of WhatsApp for up to $19 billion and Dropbox raising $250 million in January in a funding round valuing it at $10 billion.

This month, Seth Klarman, the publicity shy manager of the $27 billion Baupost hedge fund, sounded the alarm over the risks of "nosebleed valuations of fashionable companies". Airbnb's move will allow it to delay an initial public offering.

Founded in 2008 by roommates who rented out beds to help pay for their San Francisco loft, Airbnb said at the end of last year it had hosted 11m guests in 34,000 cities.

The company is raising $400m to help expand its peer-to-peer home renting marketplace into a broader offering of "hospitality", including transport or cleaning services, said co-founder Brian Chesky, now chief executive.
Copyright 2014 The Financial Times Limited