Airbnb Takes New Funding At A $10 Billion Valuation

Airbnb, the service that lets people rent their houses, apartments and rooms over the internet to strangers, has taken a $500 million round of new investment which values the company at a staggering $10 billion, according to Techcrunch.

It is not a surprise that the fund-raise or the valuation is that high - Airbnb is a transactional app and web site through which 11 million people have booked stays in 34,000 cities.

CEO Brian Chesky once said in 2012 he believed Airbnb would fill more rooms every night than the entire Hilton Hotels chain.

While sky-high valuations are no longer rare - Facebook just bought WhatsApp for $19 billion and Oculus VR for $2 billion - the difference between those transactions and Airbnb's new putative acquisition price is that Airbnb actually has a healthy, revenue-bearing business model. (Neither WhatsApp nor Oculus have revenue - yet.)

And anyone who has ever used Airbnb knows that the service is not going to go away. (I recently booked a week in the Bahamas on Airbnb and stayed in a two-bedroom, two-bathroom apartment for about half or one-third of the price that nearby hotels were asking.) Airbnb takes a cut from each transaction as the facilitator.

Rather, Airbnb's main problem is regulatory. Many cities do not allow landlords to rent out their rooms as often as hotels do. In San Francisco, for instance, some renters have found themselves subject to eviction notices if they rent rooms on Airbnb.

Previously, it became technically illegal to use Airbnb in New York City for a period. That was overturned in the courts after an appeal, however.

The new round of investment was led by private equity firm TPG. Airbnb has taken a total of $826 million in startup funding - making it one of the richer tech startups on the planet.