US-based holiday room listings platform Airbnb closed its series D round at $475m this week, showing once again the rapid potential of online companies capable of disrupting traditional industries.
The round was funded by private equity firm TPG, venture capital firm Sequoia Capital, and investment firms T.Rowe Price and Dragoneer.
Airbnb has now raised almost $800m in funding, with previous investors including Crunchfund, a VC firm backed by internet company AOL, and DST Global, the VC firm that spun out of internet company Mail.ru, as well as Founders Fund, Andreessen Horowitz,, General Catalyst Partners, Greycroft Partners and SV Angel.
The round valued Airbnb at $10bn, and came just two months after ride sharing company Uber, founded just over five years ago, raised a $1.2bn round, also at a valuation of $17bn.
The almost simultaneous valuations of Airbnb, formed in 2008, and Uber indicate the considerably rapid growth of companies using online technology to disrupt traditional service industries by allowing ordinary users to offer the same service for a lower price.
Airbnb, like Uber, offers benefits for users on both sides of the transaction. In addition to providing an added revenue stream to people with spare rooms, it can provide a cheaper and more personalised alternative to those seeking out rooms.
What is significant is that, although both companies operate in industries based around largely transitory transactions, their influence is increasingly being felt in other industries that are also being disrupted by relatively new start-ups.
The extent of this business model’s reach could be seen this week as recommendations app Sosh launched Concierge, a service that enables users to make late bookings at exclusive restaurants.
Other start-ups that have broken into industries that have traditionally been fixed include Saucey, which delivers alcohol to users on demand, LawTrades, which provides a quick online legal service, HealthTap, which acts as just one of the newly formed services linking doctors to patients for quick medical advice online, and Eaze and Canary, both of which have emerged to take advantage of the recent legalisation of cannabis in the US states of Colorado and Washington to provide home deliveries of the substance.
Airbnb, like many of these businesses but in particular Uber, has faced barriers surrounding regulatory issues as lobbyists representing the company and the hospitality industry have gone head to head over taxes, zoning, safety regulations and even the legal status of users who offer their rooms up for use by Airbnb members.
The recently publicised cases of squatters who have used the site to locate homes they have subsequently refused to move from has also highlighted issues around the service. Nevertheless, none of these issues have prevented Airbnb from expanding at a rapid rate and it cannot be disputed the company is providing a service its users want.
Some analysts have suggested that Uber can continue to grow by surpassing the industry it initially aimed to disrupt, and unless there is a concerted effort to crack down on Airbnb legally, there seems to be no reason why it cannot do the same. The question in that case would appear to be not just how large the company can grow but which industry will trigger the next $10bn online disruptor.
– Photo courttesy of Airbnb