Home-rental website Airbnb has raised $1.5 billion to finalize one of the largest private-funding rounds recorded in a deal, marking the value of the company at $25.5 billion, according to sources familiar with the matter.
Collectively buying around a third of the shares for the funding round, investment firm Tiger Global Management, Hillhouse Capital Group of China and private-equity firm General Atlantic Inc. led the group of investors willing to support the young company, according to sources cited by the Wall Street Journal.
With financial services company Morgan Stanley as the deal's adviser, Airbnb raised funds from venture capital firms Horizon Ventures, Kleiner Perkins Caufield & Byers, China Broadband Capital, GGV capital and Singapore's Temasek Holdings.
Several public crossover investment funds also made investments and took the risk in the private company before its initial public offering starts. Fidelity Investments and T. Rowe Price Group Inc. increased their stakes while mutual-fund firms Baillie Gifford and Wellington Management secured Airbnb shares as well, according to sources.
"Airbnb is like a giant ship. As CEO, I'm the captain of the ship," co-founder and CEO Brian Chesky said in an interview with Fortune's Leigh Gallagher.
Other venture-backed companies that have similarly collected a billion dollars or more in funding in a single round of private equity placement include Facebook with $1.5 billion before its IPO release in 2011, Chinese e-commerce firm Alibaba Group Holding Ltd. with $1.6 billion in 2011, and ride-hailing service Uber Technologies Inc. that raised as much as $2.8 billion in one round this year, according to Dow Jones VentureSource.
With its valuation at $25.5 billion, San Francisco-based Airbnb now ranks third on the official roster of venture-capital backed young companies worth $1 billion or higher, behind China-based mobile phone manufacturer Xiaomi Corp. and ride-sharing company Uber.
The Airbnb website features more than 1.4 million entries of apartments, houses, rooms and exotic places for rent. The company generates revenue with its 3 percent commission for every successful booking on its webpage. It also collects around 6 percent to 12 percent service fee from guests.
Revenue sales of the home rental service company are expected to surpass the $900 million mark this year. Airbnb generated $250 million in revenue in 2013 and the company projected its revenue to reach $10 billion in 2020, according to the sources.
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