The Strategist

Airbnb raises $ 1 billion investment

03/10/2017 - 15:19

Airbnb service attracted investment of $ 1 billion; thereby the company’s value reached $ 31 billion. In addition, according to sources, the service managed to profit in the second half of 2016. Now Airbnb aims to diversify its business by offering customers not only accommodation, but also bicycle rental, city tours or booking a table in a restaurant.

Open Grid Scheduler / Grid Engine via flickr
Open Grid Scheduler / Grid Engine via flickr
Online rental service Airbnb attracted investments of more than $ 1 billion in the last rounds of financing, according to documents filed by the company to the US Securities and Exchange Commission (SEC). Thus, cost of the service is now estimated at $ 31 billion. Total investments in Airbnb amounted to since the launch in 2008. Last summer, it was reported that the company raised a $ 1 billion loan to strengthen its business and develop new services; then its cost was estimated at $ 25 billion. Among Airbnb’s investors are listed investment division of Alphabet, CapitalG, and Technology Crossover Ventures.

According to the CNBC channel referring to sources close to Airbnb, the company managed to reach profit in the second half of 2016. At that, Airbnb does not plan to conduct an IPO, at least in the near future. The service operates in 65 thousand cities around the world, and receives basic income from fees for services at a rate of 6-12% from each guest and 3% from owners for each booking.

Nevertheless, last year Airbnb announced its intention to develop additional services, such as renting bicycles or guided tours. Airbnb’s biggest acquisition took place in January, when the service bought Canadian company Luxury Retreats, which specializes in renting luxury housing. In November last year, it became known that Airbnb is negotiating purchase of its Chinese rival Xiaozhu.

The service has faced serious opposition from local authorities or tour operators in many cities. So, in London and Amsterdam, Airbnb had to negotiate with the local authorities on setting a maximum deadline for renting through the service (90 days per year in London, 60 days in Amsterdam). Previously, Berlin and Barcelona adopted rather strict rules regarding Airbnb’s activities.

Projects with such a huge expansion potential like Airbnb are a tasty morsel for venture investors. Their creators to timely spot yet another "blue ocean" (a completely new market). Such teams are able to create new markets, again and again going from paths dirty with footprints to new peaks.

Airbnb’s team has long announced plans to get rid of association only with apartments for travelers. Rebranding of Airbnb held in 2014 was intended to emphasize that the company not only allows travelers to save money, but gives an opportunity to feel sense of participation in local life.