Airbnb raises $450M led by TPG; valued at $10B

Online home-rental marketplace Airbnb Inc has closed a $450 million round of funding, led by private equity firm TPG, at a $10 billion valuation, according to a report in TechCrunch citing unnamed sources.

It is believed that some of the existing investors also participated in this round.

Previously, Airbnb raised $326 million from Y-Combinator (where it was incubated in 2009), Sequoia Capital, Youniversity Ventures, Greylock Partners, SV Angel, Keith Rabois, Elad Gil, Jeremy Stoppelman, Andreessen Horowitz, General Catalyst Partners, Jeff Bezos, Digital Sky Technologies, CrunchFund, Ashton Kutcher, Eniac Ventures and Founders Fund. This brings the total funds raised by AirBnB to $826 million.

Allen & Co, which had also advised Facebook on its $19 billion purchase of WhatsApp, reportedly acted as the financial advisor to the transaction.

Texas-based PE giant TPG recently made a large investment in ride-sharing company Uber, another major player in the burgeoning sector known as the sharing economy. TPG also has ownership in property and travel markets through RentPath and Sabre/Travelocity.

TPG has also just sewn a global joint venture with India's Smile Group where it has committed up to $100 million to help digital businesses expand to Asia and Africa.

Airbnb, whose website rental listings range from private rooms to manors and islands, has become one of Silicon Valley's most successful start-ups in the five years since it was founded by a trio of graduates from the Rhode Island School of Design and Harvard. Airbnb now has over 600,000 listings across nearly 200 countries. As per media report, its revenues in 2013 was about $250 million, more than double what it made the year before.

Airbnb has operations in all the major cities of India. Recently, Nasdaq-listed TripAdvisor, an online travel review and recommendation site, has launched holiday rentals on TripAdvisor holiday rentals and home stay in India, allowing travellers to search and compare more than 5.5 lakh properties around the world.

Smile Group had previously partnered Airbnb in 2011 to help it expand internationally in countries other than the US.

The controversy

Airbnb's foray into the hospitality business has been met with controversy in critical markets like New York State, which prohibits renters from subletting their homes for less than 30 days if they are not present. The company remains locked in a legal battle with New York Attorney General Eric Schneiderman, who subpoenaed Airbnb for information about its hosts in the state last year to determine which were in violation of state law. The San Francisco city attorney's office has also looked into the legality of such short-term rentals after coming under pressure from tenant advocates, who say the proliferation of Airbnb rentals has sapped the rental housing market of supply and driven up rent prices.

(Edited by Joby Puthuparampil Johnson)