Airbnb is on the brink of raising $1.5 billion that would boost its valuation up to $25.5 billion, as it comes forth as the latest sharing economy company from US. The company attempts to tap into booming demand in Asia.
According to PrivCo, the price tag keeps raising for hot startups. But, the recent investments done by the company was two-fold the amount that was previously vested. Airbnb’s recent business valuation is an eye-popping figure, and also a part of a private IPO trend.
These days, financial institutions like mutual funds, Hedge funds and big foreign investors are investing money in small startups like Uber and Airbnb. These financial institutions give such startups an opportunity to raise their funds as much as possible they can with an IPO call, but it should be devoid of the hassles of public disclosures.
Sam Hamadeh, CEO of PrivCo, said that every investor keeps a watch on a narrow window to raise funds in the private market, and the public market would not absorb that sort of valuation. But, having such sky-high valuations make it more challenging for the company to dissolve in future.
Hamadeh said that if the company is valued at $25 billion, and is not yet public; then he can count a number of companies on his finger tips, who can write a check for that amount.
The fact cannot be denied that Airbnb is the fastest growing online company. It was founded in 2008, and has since successfully been expanded to 34,000 cities, and 190 countries. However, still, the company is facing major regulatory hurdles in significant markets like New York City, and others.
According to PrivCo, Airbnb lost about $150 million last year, and it’s on track to lose about $200 million in 2015.
Airbnb’s latest financing round is being headed by private equity General Atlantic, Hillhouse Capital Group – a Chinese fund manager, and Tiger Global management that just led about $80 million investments in Postmates. Once, the deal gets approved, it is likely to get officially announced on Monday.