
Airbnb Raises $1.5B in One of Largest Private Placements - t23
http://www.wsj.com/articles/airbnb-raises-1-5-billion-in-one-of-largest-private-placements-1435363506
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dthal
Is there any information to be had anywhere about terms? We hear the valuation
shouted from the rooftops, but with nothing about the terms, its hard to know
what the big number really means. Specifically, does anybody know if this a
common stock purchase, or is this some kind of convertible preferred
stock/convertible note with a liquidation preference?

~~~
pbreit
Almost certainly preferred with 1x liquidation preference meaning investors
don't make much of a return unless it sells or trades for well in excess of
$25b.

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staunch
Imagine if every Airbnb host had the option of having 5-10% of their earning
withheld and used to purchase equity. You'd have a lot of regular people (that
helped build the business!) receiving a windfall, instead of a few rich
jagoffs getting a bit richer. And on the downside there would be no serious
harm. IPOs are finished. Crowdfunding with equity can't come soon enough.

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oh_sigh
Why don't you start a FairBNB.com that does exactly this?

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Avitas
Given how gigantic this market is, that's a pretty common occurance (i.e.,
starting a property/vacation rental/related site).

There's already plenty of other big players like HA, VRBO, FK, TA, rent and
countless others. There's even giants that doing this that are not fully
devoted to short-term rentals and vacation stuff like CL.

That doen't even touch on the devoted timeshare and timeshare-related stuff.
Or, how many convenient insurance companies can you think of that will
underwrite policies for these shot-term renters?

There's just so much opportunity in this field....

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ahmetmsft
Can we please stop posting articles behind a paywall? I can't read this at
all, not even in incognito browser mode.

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lmcnish14
If you copy and paste the link into Google, you can find a version you can
read without paying for the subscription.

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hatred
I would be greatly interested to know what it means for later employees who
had RSU's since this effectively might set back the IPO dates by at least a
few number of years. How does this effects them ?

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erichurkman
The company could also opt to settle portions of their employees' RSUs for
cash if they wanted to offer employees liquidity even in advance of an IPO.

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001sky
Airbnb $25.5Bn $0.9B revs 28.3x 90% yoy

Marriott $20.9Bn $14.8 revs 1.4x 8% yoy

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rokhayakebe
Marriott: 200,000 employees, 697000 rooms, 4000 locations hence no more than
4000 cities, 80 countries

AirBNB: 1600 employees (less than 1% of Marriott's), +1.4M rooms (for which
they pay no mortgage or maintenance), 190 countries, 34000 cities.

~~~
venomsnake
Marriott - legal and obeying regulations.

AirBNB - 50 shades of legal gray.

~~~
jonny_eh
Next week in Paris, hotel owners burning cars?

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fruitfulfrank
You need an account to read.

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tristanho
You can read it via
[https://www.google.ca/search?q=Airbnb+Raises+%241.5+Billion+...](https://www.google.ca/search?q=Airbnb+Raises+%241.5+Billion+in+One+of+Largest+Private+Placements)
if you're so inclined... the article is pretty dry though.

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mrgordon
The gist is that they are valued at $24 billion pre-money/$25.5 billion post-
money and are growing insanely quickly :)

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htmelvis
Is this Real Life?

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msoad
I wonder how this impact employee options? They still need to wait another 3-4
years for IPO to see what their options really worth. There is also a big
chance of a massive reverse stock split for a company with this many rounds of
investments.

~~~
mrgordon
Why do you think there'd be a reverse stock split? The price has been going
up, not down. Or you think it would happen to get around the shareholder limit
pre-IPO?

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erichurkman
Stock splits do not change ownership or value. If you own 10 shares pre-split
valued at $1 per share, and you have a split 10-for-1, you now own 100 shares
worth $0.10 per share.

In general, companies do reverse splits prior to an IPO to push up the share
price. It's seen favorably to have a $50.00 IPO price per share vs $5.00 even
though the overall value is the same – the headlines read better that your IPO
debuted at $50 but increased to $60 vs an increase of $5 to $6.

~~~
mrgordon
According to Wikipedia, reverse stock splits remove everyone with less than
the split factor from the cap table. So if it was a 10-to-1 reverse split then
you'd need at least 10 shares or you'd get paid out in cash

[https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-...](https://en.wikipedia.org/wiki/Reverse_stock_split#cite_note-3)

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erichurkman
If you have 10 shares or 1 share in a company with tens or hundreds of
millions of shares on the cap table, your stake effectively doesn't exist, so
getting a cash payout is probably in your favor.

~~~
mrgordon
Right thats why I didn't understand why the original comment thought a reverse
stock split is in the cards

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bsder
Looks like a Chinese buyout, no?

Presumably a good way to get wealth out of China and then clean the money with
an IPO. Timely, given the bubble popping in China.

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adventured
No, it's not a Chinese buyout. You're talking about the acquisition of maybe
2% to 3% of their equity. It's meaningless in that regard.

There are two companies in China that could afford to buy Airbnb, that would
be reasonable potential buyers. Tencent and Alibaba, neither of which are
about to attempt such a purchase. It would cost ~$40 billion to buy them
today.

~~~
bsder
> No, it's not a Chinese buyout. You're talking about the acquisition of maybe
> 2% to 3% of their equity. It's meaningless in that regard.

Really? Where did that 2% to 3% of equity number come from. I would be
_stunned_ if $1.5 billion is going into the company for just that. Even the
valuation numbers seem to indicate at _least_ 6%.

And, an even more interesting question is: "Why does airbnb need $1.5 billion
if their annual revenue is $900 million?"

People can downvote all they want, but did any of you people _read_ the
article:

"Leading the round are private-equity firm General Atlantic Inc., Chinese firm
Hillhouse Capital Group, and alternative-investment firm Tiger Global
Management, which are collectively buying about a third of the shares
allocated for this funding round, the people said.

The deal, advised by Morgan Stanley, includes Singapore’s Temasek Holdings as
well as venture-capital firms Kleiner Perkins Caufield & Byers, GGV Capital,
China Broadband Capital and Horizon Ventures."

That's a hell of a lot of Chinese investors.

~~~
mrgordon
Yes the company is trying to expand internationally and it makes sense to
partner with major players in markets that are significant for them.

As far as the numbers go:

$1.5B / $25.5B = ~5.88% equity

Then you figure the Chinese investors got maybe a third or half of that and
you get to the 2-3% that someone else arrived at.

