Airbnb IPO: All you need to know
Way before Airbnb convinced people to sleep in stranger’s homes and became a $100 billion company, it was just an idea to make some extra money and pay the rent. It took the founders of Airbnb, and their first guests, to realize that their idea was much larger than expected. There were a lot of hurdles at first, but they were able to get through these, and become a dominant player in the market with its Initial Public Offering (IPO) in December 2020.
But how did an air mattress on the floor of a San Francisco house become a great idea for a startup that has now turned into an empire? Let us dive in and understand more about the Airbnb IPO details!
Airbnb is an online marketplace that allows platform members to rent out a part or all of their properties to travelers. This business started as a means to pay rent by three people, namely, Nathan Blecharczyk, Joe Gebbia, and Brian Chesky. The company was founded in 2009 in San Francisco, and now the company offers over 40,000 activities and 7 million accommodations that spread over 191 countries and regions. Airbnb’s offerings include:
- Airbnb – A property sharing service for consumers
- Airbnb for work – A service catered towards business travelers
It was in September last year when Airbnb had announced that it was planning to go public. And the company has reached the point where the Airbnb IPO is actually taking place.
In October 2007, former schoolmates Brian Chesky and Joe Gebbia moved into an apartment and became roommates. After a while, they could not afford the rent on their apartment, so they came up with the idea of putting their air mattress in their living room and turning it into bed and breakfast, for which they built their own site. The website got its first three renters who paid $80 each, and after that, the founders began to get emails from people from all over the world asking when the site would be available for other destinations.
In February 2008, Chesky’s former roommate, Nathan Blecharczyk, joined the team as the CTO (Chief Technology Officer) and the company’s third founder. At this time, the name of the company was AirBed & Breakfast. They recreated the website to expand their idea and on August 11, 2008, the site airbedandbreakfast.com was officially launched. They then took advantage of the Democratic National Convention to capitalize on the resulting lack of hotel space. This was quite successful for them.
After hearing about their company, the computer programmer Paul Graham invited the founders to the winter training session of his startup incubator, Y Combinator, in January 2009. Here, they did not just receive training but were able to secure some funding in exchange for a small interest in the company. The founders used the Y-Combinator’s investment to fly to New York and promote their company. They came back with a better business model.
The next step the company took was in April when they received seed money from Sequoia Capital. In 2011, the company opened its first international office in London. And from there, the company kept growing and opened its offices in many other countries as well. In February 2018, the company introduced Airbnb Plus, which is a collection of homes that have been vetted for quality services, design, and comfort. They also introduced Beyond by Airbnb that offers luxury vacation rentals. And by October 2019, about 2 million people were staying with Airbnb each night.
Then came the COVID pandemic, and there was a significant drop in bookings. Due to this, the company’s valuation was reduced from $31 B to $26 B internally. And then, in May 2020, the company sent a memo to all employees that they would be laying off about 1,900 employees due to the pandemic. On the 19th of August 2020, the company then announced that the Airbnb IPO had been filed for, and it was set to go public in December. And on December 10, 2020, the company went public with a valuation that was over $100 billion, making it one of the largest IPOs of 2020.
The story of how Airbnb got its funding and reached the IPO stage is quite interesting. Let us understand more about how much funding the company got and who the main investors in the company are.
Airbnb funding rounds
Airbnb started off with just an idea and has since grown into a huge company. Starting out in 2008, they wanted to raise money without taking out a loan or giving up a lot in exchange. So, they bought a lot of cereal boxes and designed a special edition election-themed box, which were sold at convention parties for $40 a box. They were able to sell about 500 such boxes and raise about $20k with this. It was still tough for them until they received their first seed funding.
Here are the various Airbnb funding rounds that the company went through before it decided to go public:
- Seed – In 2009, Airbnb joined Y Combinator’s winter class and got a funding of $20,000. And soon after that, they got another seed funding of $600k from Y Ventures and Sequoia Capital.
- Series A – In November 2010, Airbnb raised about $7.2 million from various different investors, including Y Ventures, Keith Rabois, Elad Gil, Jeremy Stoppelman, Ashton Kutcher, Greylock Partners, SV Angel, and Sequoia Capital. The company’s post valuation was $70 million at this time.
- Series B – In July 2011, Airbnb acquired funding of $114.9 million from General Catalyst Partners, Ashton Kutcher, Oliver Jung, Jeff Bezos, CrunchFund, DST Global, Andreessen Horowitz, and Sequoia Capital. They also got another funding during this time of 2.1 million from CF and A-Grade Investments. The post valuation of the company at this time reached $1.3 billion.
- Series C – In October 2013, Airbnb got another $200 million funding from CF, Ashton Kutcher, Founders Fund, and Sequoia Capital. The post valuation of the company was at $2.9 billion.
- Series D – In April 2014, Airbnb secured $519.7 million funding from 137 Ventures, Sherpa Capital, TPG, Dragoneer Investment Group. T. Rowe Price, Andreessen Horowitz, and Sequoia Capital.
- Series E – In June 2015, Airbnb secured a funding of $1.6 billion from China Broadband Capital, Hillhouse Capital Group, Groupe Arnault, Baillie Gifford, Temasek Holdings, General Atlantic, Tiger Global Management, Fidelity Investments, Wellington Management, T. Rowe Price, Horizons Ventures, GGV Capital, Sequoia Capital, and Kleiner Perkins. And then in November 2015, they got another funding for about $100 million from FirstMark. The final post valuation of the company after this was 25.5 billion.
- Series F – In September 2016, Airbnb was again able to secure funding of $1 billion from CapitalG, Geodesic Capital, Altimeter Capital, Glade Brook Capital Partners, and Eniac Ventures. The final post valuation of the company stood at $31 billion after this.
Here is a summary of the Airbnb funding rounds throughout the years:
|Airbnb Funding Round||Year||Total Amount Raised||Post-Money Valuation|
|Series A||2010||$7.2 million||$70 million|
|Series B||2011||$114.9 million||$1.3 billion|
|Series C||2013||$200 million||$2.9 billion|
|Series D||2014||$519.7 million||$10.5 billion|
|Series E||2015||$1.7 billion||$25.5 billion|
|Series F||2016||$1 billion||$31 billion|
Over 7 years, the company went from their seed funding of $20,000 to having a company valuation of over $31 billion. And just like this, Airbnb started off with nothing and reached a point where the Airbnb IPO is one of the largest in 2020.
Airbnb key investors
Here is a list of the key Airbnb investors:
- Andreessen Horowitz
- Baillie Gifford
- China Broadband Capital
- Digital Sky Technologies
- General Atlantic
- General Catalyst Partners
- Greylock Partners
- GGV Capital
- Horizon Ventures
- Wellington Management
- Kleiner Perkins Caufield & Byers
- Hillhouse Capital Group of China
- SV Angel
- Sequoia Capital
- Tiger Global Management
- Temasek Holdings
- Y Combinator
Airbnb started as an online marketplace where people can easily rent out their unused space to host travelers. Due to COVID-19, the company’s value fell to $18 billion but again went to $30 billion at the end of the year. This rise was a sign through which the founders decided to make the Airbnb IPO actually happen. The Airbnb IPO date was December 10th, and with this, the value of the company has now crossed $100 billion since its trading began.
2020 started off with a shock and has been the worst year, not just for the people, but also for many businesses worldwide. And Airbnb wasn’t immune to the effects of COVID-19. The company was hit hard, but despite the struggles they had to endure, they managed to make their first move towards going public as the year is coming to an end.
Airbnb’s IPO to value the company at over $100 Billion
Before the company went public, it was valued at $30 billion. And based on the drop in the valuation at the start of the year, this valuation was an admirable achievement.
Airbnb was valued at $30 billion in 2017, but after that, it began to drop. This year was the worst initially until the second half of the year. People began to rely more on homely experiences rather than hotels when traveling to maintain social distancing and stay safe from COVID-19. So, as much as COVID-19 created trouble for Airbnb, it also helped the company in the end.
When is the Airbnb IPO date?
The Airbnb IPO date was December 10th, 2020, and the company has officially come into the market. The company announced that it planned to sell 50 million shares at the price $44 to $50 per share and it has been successful in selling a lot of its shares since the start of the Airbnb IPO. In fact, if you were hoping to purchase the shares of Airbnb as an investment, this is the right time for it. Airbnb stock price has risen to around $163 as of December 21st, 2020.
From this article we can see how Airbnb has climbed from a startup with two founders to where it is now with a valuation of over $100 billion dollars. Hopefully this amazing story can give us hope that we can reach such heights one day. And along their journey, the company had to be mindful of its shareholder ownership structure and cap table. And one such software to track all your Cap Table movements is Eqvista.
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