Airbnb Private Placement Books $1.5 Billion

Airbnb Private Placement Books $1.5 Billion

The Airbnb private placement indicates that “going private” is a hot option for even larger capital raising efforts. Startups seeking to raise funds for expansion should look to Airbnb as a model for demonstrating a strong business plan and moving ahead with a sophisticated private placement. In one of the largest private placement raises yet completed, Airbnb successfully raised $1.5 billion, achieving a valuation of around $25.5 billion.

At PPM, we have experience with dozens of technology startup private placements. We are well aware of how nuanced the Airbnb private placement memorandum must be in its structuring of an advantageous offering for the company and investors (a private placement memorandum (PPM), also known as an offering memorandum (OM), would lay out the structure of Airbnb’s offering, detail its business and management model, and disclose all risks. The PPM thus acts as a protectionary document for the internet hospitality platform and gives investors a clear idea of where their capital is going.

Morgan Stanley was the broker-dealer advising on the private placement deal. Investors are said to include venture capital (VC) outfits Kleiner Perkins Caufield & Byers, GGV Capital, China Broadband Capital, and Horizon Ventures. Temasek Holdings, a Singapore firm, is also a major player in the offering. Interestingly, public funds that back some private ventures (so-called “crossover” funds) are also taking an interest, and include mutual funds matched with the help of Wellington Management and Baillie Gifford such as T. Rowe Price Group Inc. and Fidelity Investments.

Airbnb private placement

At PPM, we track private placements closely, as you can imagine. Our offering memorandums and private placement memorandums benefit from learning about the latest action on the Street and beyond. Until now, we noticed that Uber’s $2.8 billion raise earlier this year through private placement, while past rounds of capital at Alibaba and at Facebook were said to have privately raised $1.5 billion and $1 billion, respectively, through private placement offerings. According to the Wall Street Journal, “Several recent deals have used bankers, including Spotify AB’s $526 million offering via Goldman Sachs Group Inc., and Credit Karma Inc.’s $175 million round via Goldman and J.P. Morgan Chase & Co.”

Airbnb is making about $900 million this year, but its growth trajectory is stellar and if it keeps up will hit $10 billion in revenues by the end of the decade.

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