Apparently, the world is full of people who own homes or condos but would rather rent them out than actually live in them. And it has an equal number of people (perhaps the same ones) who’d rather bunk in someone else’s home when traveling than stay in a hotel. That’s the basis for the burgeoning success of Airbnb, the San Francisco-based vacation rental clearinghouse that announced today that it has collected a stupefying $112 million in Series B funding from Menlo Park, CA-based Andreessen Horowitz, Cambridge, MA-based General Catalyst, and Moscow-based DST Global.
The startup, which emerged from the Y Combinator venture incubator in 2009, had previously raised about $7.8 million from Greylock Partners, Sequoia Capital, Ron Conway’s SV Angel, actor Ashton Kutcher, and Youniversity Ventures. The Series B haul, which is more than 14 times the size of the A round, could become the new archetype for what they call an “up round”—an investment round based on a much higher valuation than earlier rounds. The talk, as reported today in The Financial Times and elsewhere, is that Airbnb is now valued at $1.3 billion.
It’s a startling leap for a company that, less than three years ago, was reduced to selling collectible cereal boxes to stay afloat, as CEO and co-founder Brian Chesky recounted in this Startup School talk last October. (Chesky and co-founder Joe Gebbia are graduates of the Rhode Island School of Design in Providence, RI; the third co-founder, Nathan Blecharczyk, is a computer science graduate of Harvard.) The “Air” in the name is a reference to the air mattresses that the site’s earliest users often slept upon, but today the typical Airbnb rental is an urban loft, luxury apartment, or houseboat; prices of $1,600 a night are not unheard of.
Airbnb says it has listings in more than 16,000 cities in 186 countries, and that it’s booked over 2 million nights, a million of them in the last four months alone. The backbone of the service is a website where owners can create free rental listings in minutes by uploading photos and other information. The site handles booking and payment, and both owners and renters can leave reviews. Airbnb collects a 3 percent fee on all stays from property owners and a 6 to 12 percent fee from renters.
“Over the past three years, we’ve built a community marketplace for unique properties and brought it into the mainstream and into almost every country on the planet,” Chesky said in today’s announcement about the Series B round. “Today is a watershed moment—both for Airbnb as a company and for our community—that will enable us to touch new markets and expand our vision to make the world’s most interesting and inspiring places accessible to our users.”
The company says it plans to use its new capital to bulk up its team and expand internationally, especially in Europe and South America. In Europe, it will face competition from the likes of 9flats and Wimdu. The latter raised $90 million in financing last month.
Jeff Jordan, a general partner at Andreessen Horowitz and a veteran of eBay’s early years, says in a blog post today that “Airbnb reminds me more of eBay in its early days than any other business I have ever encountered,” and argues that “Airbnb is to spaces what eBay is to products.” The implicit hope is that Airbnb is poised for eBay-scale growth, given that it’s connecting buyers and sellers in a formerly inefficient market, helping property owners to earn income, and, in Jordan’s words, winning “passionate users who evangelize the service.”
