US-based short term accommodation marketplace operator Airbnb reportedly raised $850m last week in a round led by internet and technology group Alphabet’s growth equity unit, Google Capital, representing its first direct corporate backing.
Google Capital co-led the round with growth equity firm Technology Crossover Ventures, according to the Wall Street Journal, and the round valued Airbnb at $30bn, up from the $25.5bn valuation at which it raised funding in 2015.
The round boosted Airbnb’s total equity funding to about $3.25bn and comes after $1.6bn in equity funding over the course of 2015 as well as $1bn in debt financing from JPMorgan Chase, Citigroup, Bank of America and Morgan Stanley.
Airbnb has grown substantially since its launch in 2008 and now oversees a network of more than two million listings across about 34,000 cities. Its revenue had risen 89% year on year as of the end of August 2016, according to data compiled by e-commerce analytics firm Slice Intelligence, which would put it on track to reach about $1.7bn of revenue this year.
The company’s progress is perhaps particularly notable considering it has encountered several issues regarding both regulatory hurdles concerning taxes and safety provisions, and periodic stories about nightmare tenants or racial profiling among its user base.
One way Airbnb appears to be navigating growth has been the introduction of a new feature called the Airbnb Friendly Building Program, which will allow landlords and tenants to collaborate on listings for when the tenant is away. Airbnb is stressing that the initiative will be restricted to long-term tenants, so as to ease concerns that landlords are using the platform to make a quick buck and driving up local rents in the process.
The scheme, which Airbnb began piloting in April, was joined by the establishment of an innovation lab last month known as Samara, which may end up being far more important.
Samara is chiefly staffed by designers and architects and its first venture is a communal housing project that will be built in a small Japanese town which, if it proves successful, could enable Airbnb to expand its business to the point where it is less vulnerable to anything that impacts its core product.
Joe Gebbia, Airbnb’s co-founder and chief product officer, told Fast Company: “We are going to use the lens community to build services that open new doors and new revenue streams for the community.
“That space includes architecture, product design, software design and new economic models.”
The company’s expansion plans could give a clue to Google Capital’s involvement. It reportedly asked its existing backers, which include venture capital firms such as Andreessen Horowitz, Founders Fund and Sequoia Capital, as well as late-stage firms such as Fidelity Investments and Tiger Global, not to invest in the latest round because it wanted to attract a different blend of backers that could provide them with new expertise.
Alphabet certainly fits the bill in that regard, having grown from a search engine developer to a fully formed conglomerate overseeing numerous media and internet entities, as well as cable and internet provision, satellite data and life sciences, partly through the establishment both of corporate venturing units (GV as well as Google Capital) and innovation units such as Google X and Jigsaw, which will likely prove influential for Samara.
In a more immediate sense, the funding will ease capital worries for Airbnb and ease any pressure to go public in the next year, or at least until local regulatory issues in large markets such as New York and San Francisco are ironed out, sources told Fortune last week. By that point, Airbnb could be far more than just its core offering.