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10 Mar 2017

Airbnb becomes world’s 4th biggest startup

Airbnb is the world’s fourth-most valuable startup valued at $31bn. This valuation makes Airbnb second only to Marriot International on paper among traditional hospitality competitors. The San Francisco based company has managed in nine years to surpass famous chains of hotels like the Hyatt, the Hilton and the InterContinental.

Last summer, Airbnb was seeking up to $850mn of funds, but a filing on March 9 reported that it received more than $1bn. The announcement for the excellent results came with a note that the company doesn’t have any plans of going public any time soon. This might be sounding weird but there is an explanation.

Airbnb is a very attractive company for going public in the eyes of investors. In 2016, it was the first time the company became profitable. The projected earnings will exceed $3.5bn by 2020. The directors of the company think that it’s not necessary to go public. Most startups tend to avoid all the paperwork and preparation that is needed for going to compete in the stock market. Startups enter the stock arena, only if pressed by investors who are looking to cash in, or in case they are searching for new funds.

Airbnb doesn’t face any financing problems. On the contrary, access to capital is hardly an issue. In July, the company offered its employees an opportunity to sell part of their shares. In order for this to happen, employees had to agree that the remaining shares would be kept in their vaults for a certain time period. Airbnb doesn’t seek funding only among its employees. In previous years, every time it required funds, famous funds were coming to the rescue like Google Capital, the China Broadband Capital etc.

Airbnb has tripled its valuation in the last two years. As the heads of the company said, the new funds will be used to further feed the company’s growth and the international expansion. The startup recently opened its operations to Cuba for the first time, and has seen a rapid growth in the Chinese market since Chinese travelers appreciated the good services that they provided. It is reported, that the company has begun to experiment with new ways of earning revenue. For example, it is considering of letting tourists to include add-on services, like booking a ticket to a museum or doing a restaurant reservation.

Airbnb is an online marketplace and hospitality service that enables people to list or rent short term lodgings. In many cases, it has been criticised for breaking laws concerning subletting apartments and lack of transparency in pricing, however it has been the favourite site for tourists all around the world.