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Monday, July 25, 2011

Airbnb Raises $112 Million from Investors, Is Now Valued at $1.3 Billion

Posted By on Mon, Jul 25, 2011 at 11:05 AM

click to enlarge Lichtenstein: Available to rent
  • Lichtenstein: Available to rent

It's a simple idea: Set up a clearinghouse for people to informally "rent" out their homes, or rooms in their homes, to travelers. But it wasn't until 2009 that a group of San Francisco entrepreneurs tried to base a business on this idea, launching a website, Airbnb, that connects people with space to rent and visitors disinclined to stay in a hotel.

Last year, Airbnb's prospects seemed uncertain. But that's changing fast. Yesterday the company, still based in San Francisco, announced it has raised $112 million in venture funding. More than half of that was contributed by Menlo Park-based venture fund Andreessen Horowitz, which seems quite bullish on the company. As Andreessen's general partner, Jeff Jordan, put it in a blog post:

The Airbnb service quickly struck an extremely powerful chord with consumers. Growth has been flat-out explosive, with over 2 million room nights already booked. The site now features spaces in 186 countries and over 16,000 cities around the world. Hosts can earn substantial sums of money -- one has even used Airbnb earnings to pay off his mortgage -- and their community of users is passionate about the service, enjoying the social aspects of Airbnb travel.

Jordan also says that Airbnb, in the way it fosters market interactions among consumers and sellers in a way profitable for all involved, "reminds me more of eBay in its early days than any other business I have ever encountered."

The Financial Times reported that the company is now valued at $1.3 billion after the influx of investment.

The company's name comes from its early days, when founders Brian Chesky and Joe Gebbia rented out some space with airbeds to attendees at a design-industry conference in San Francisco. But as Airbnb grows, it will be amusing to watch how users stretch the site's concept. There are already some unusual deals available: For the modest sum of $70,000, for instance, you can rent the entire principality of Liechtenstein.

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Peter Jamison

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