A week after announcing a series of drastic cost-cutting measures due to the COVID-19 pandemic, Airbnb CEO Brian Chesky revealed the company clenched $1 billion in Series G debt and equity funding from Silver Lake and Sixth Street Partners.
This is Airbnb’s second-largest funding round, and brings the company’s total funding amount to $5.4 billion since 2008, with a $26 billion pre-money valuation.
“First off, I want to thank Silver Lake and Sixth Street for their incredible partnership and support,” Chesky said in a written statement. “They have a well-earned track record for being insightful thought partners who always have a strong sense of where the world is going.”
“The desire to explore, connect, have new experiences, and have a comfortable place to call home are universal and enduring,” he added. “And our commitment to create a greater sense of belonging—for everyone, everywhere—will never change.”
The $1 billion will be used for the recruitment and retention of hosts, the of launch longer-term stay options geared toward students and professionals, and the expansion of its Airbnb Experiences program that enables locals to provide immersive excursions for Airbnb guests.
Lastly, $5 million will go to the company’s Superhost Relief Fund that provides up to $5,000 in grants for superhosts that rely on Airbnb as a main source of income and have lost a “significant percentage” of their income due to cancellations.
Despite economists’ bleak outlook for the travel and hospitality industry, Silver Lake and Sixth Street doubled-down on its decision to invest in Airbnb, noting the founders’ feat of building a lucrative and innovative business in the midst of the Great Recession in 2008.
“Airbnb’s revolutionary platform has transformed how people travel, unlocking one-of-a-kind stays and experiences at scale,” said Silver Lake Co-CEO and Managing Partner Egon Durban in a written statement. “This was made possible by Brian, Joe [Gebbia] and Nate [Blecharczyk]’s inspired leadership and care for both their guest and host community.”
“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,” Durban added. “Airbnb’s diverse, global, and resilient business model is particularly well suited to prosper as the world inevitably recovers and we all get back out to experience it.”
Last week, Airbnb’s funding round was no more than a rumor spread by early Airbnb investor Ron Conway in an interview with CNBC.
“Those investors are calling me saying, I hope Airbnb is raising right now because if they are, I want a seat at the table,” Conway told CNBC on March 30. “A lot of them are ones that went through the dotcom crash with me back in 1999 and 2000.”
“They’re the same people who were very wise and invested in companies like Google, Amazon and Apple,” he added. “They’re saying, coming out of this downturn, it’s going to be companies like Airbnb that will be huge huge market performers.”
Although a $1 billion funding round seems to signal that a 2020 initial public offering (IPO) deadline is back on the table, Bloomberg and other business publications say it’s still unlikely as the company has yet to become consistently profitable.
“Given new debt and likely deep losses until the market improves, I would be surprised if the company completes an IPO this year,” PitchBook analyst Paul Condra told Bloomberg.
“Even before the pandemic, Airbnb wasn’t consistently turning a profit,” the article continued. “In the fourth quarter of last year, the company reported a loss of $276 million excluding interest, taxes, depreciation and amortization. That’s compared with a loss of $144 million a year earlier. Revenue increased 32 percent in the fourth quarter of 2019 to $1.1 billion.”