Airbnb raises $1 billion to stockpile cash
Airbnb has raised $1 billion in new funding as it grapples with devastation from the coronavirus pandemic and as some technology startups take extra measures to stockpile cash.
The San Francisco vacationrental company said that privateequity giant Silver Lake and investment firm Sixth Street Partners led the investment, which was a mixture of equity and debt. Airbnb, which was previously valued at as much as $31 billion, lowered its internal valuation to $26 billion last month, according to a person with knowledge of the situation who declined to be identified because the information was confidential.
“The new resources will support Airbnb’s ongoing work to invest over the long term in its community of hosts who share their homes and experiences,” the company said Monday.
Airbnb’s business has been hobbled during a shutdown in global travel caused by the spread of the coronavirus. It is a delicate time for the company, one of the largest and most prominent startups to emerge from Silicon Valley in the past decade. Airbnb had said that it plans to go public this year. But that may be in limbo because of stock market volatility and uncertainty caused by the virus.
Airbnb’s new funding points to some of the tactical measures startups are taking as they navigate the difficult period. In the past month, numerous startups have laid off or furloughed staff, and cut spending and expansion plans in moves that signal the end of a longrunning boom for the industry.
Airbnb, too, enacted a hiring freeze, slashed its $800 million marketing budget and cut the pay of its top executives last month. The company raised more money even though it has $3 billion in cash on its balance sheet and access to a $1 billion line of credit.
A spokesman declined to comment on what the new funding meant for an IPO.
Amid the coronavirus outbreak, Airbnb has contended with frustrated customers who demanded refunds for canceled trips, while also trying to find ways to support the people who rent their homes on its site.
On March 30, CEO Brian Chesky held a video call with the company’s hosts and said that the past few weeks had been a wakeup call. He announced a $250 million fund to compensate hosts for a portion of their booking cancellations, as well as a $10 million pool of grant money for those known as Superhosts, paid for by Airbnb’s founders and employees.
“I’m sorry we didn’t consult you as partners,” Chesky said on the call.
In its funding announcement, Airbnb said it would focus on travel that’s closer to home and longterm stays, including students and people on extended work assignments.
Last month, Airbnb began fielding new and unsolicited funding offers from venture capital firms, privateequity firms and sovereign wealth funds, a person familiar with the situation said at the time. Privateequity firms like Silver Lake are sitting on large reserves of cash. Many of them said they see an investment opportunity as American businesses struggle.
In a statement, Egon Durban, coCEO of Silver Lake, said Airbnb is wellpositioned to thrive when the world recovers from the virus.
“While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring,” he said.