By Alex Konrad and Ryan Mac
With Airbnb just days from closing a large new funding round that will value the company at $10 billion, its founders are about to become billionaires.
Cofounders Brian Chesky, Nathan Blecharczyk and Joe Gebbia will all maintain personal stakes of just over 15% of the company after the dilution of this raise, according to knowledgeable sources, which will net Airbnb between $400 and $500 million. At about a $10 billion valuation, that makes each cofounder’s personal stake in the San Francisco-based company worth just over $1.5 billion, vaulting them into the ranks of the world's youngest billionaires.
The new round, which will close in the next one to two weeks, is being led by Fort Worth, Tex.-based private equity firm TPG Capital, with a number of other investors, not all of whom are expected to sign on at once, but in tranches over time, sources tell Forbes. Airbnb declined to comment on both the round and the cofounders' personal stakes.
Don’t expect Chesky, 32, Gebbia, 32, and Blecharczyk, 30, to go buy their own Necker Island anytime soon—those riches are still largely tied to Airbnb’s future in stock, and the founders prefer to live simply. Chesky and Gebbia, who first came up with the idea for Airbnb in 2008 as Rhode Island School of Design grads transplanted to San Francisco, still live in the same apartment in the South of Market neighborhood where they started the company. Blecharczyk, who joined early that year as cofounder and CTO of what was then called Airbedandbreakfast.com, still bikes to work, according to an Airbnb insider. And much like Uber cofounder Travis Kalanick has been known to drive cabs around town, Chesky will still list his apartment on Airbnb once in a while to personally test out the local listings.
“People providing these services in many ways are entrepreneurs or micro-entrepreneurs,” Chesky said in a Forbes cover story last year. “They’re more independent, more liberated, a little more economically empowered.”
Airbnb’s become a leader of the share economy, with over 600,000 listings across 160 countries used by millions of annual guests, and 11 million in its five-year history. The company says New Year's Eve 2013 it had a record 250,000 guests in one night; a guest checks somewhere in the world each 2 seconds. While Airbnb does not disclose revenue, it takes 3% from a host’s booking fee and 6% to 12% from the fee charged overall to each guest.
The trio’s first funding came in 2009, when they got into famed tech incubator Y Combinator and eventually impressed founder Paul Graham as well as Sequoia Capital, who put up $600,000 in seed funds after the program. The company’s raised money from a range of Silicon Valley elite investors since Sequoia, which was joined in a Series A round by Greylock, SV Angel, and angels including Ashton Kutcher. In 2011, it raised $112 million at a valuation north of $1 billion led by Andreessen Horowitz and joined by DST and General Catalyst Partners as well as
Now the company’s sitting on a $10 billion valuation from private equity sources. No word yet whether existing investors have re-upped in the round, but an insider tells Forbes that it's unlikely that the founder or early investors will use this new raise to cash out and gain liquidity from their positions.
By turning to private equity sources for its latest cash and lofty valuation, Airbnb’s signaling that it’s taken another critical step in the life cycle of a private tech company. For TPG, it means a foot in what could prove an extremely popular eventual public offering, possibly later in 2014, while private equity funds often come with generous valuations and dilution concerns for founders looking for guidance as they begin to consider preparing for Wall Street investors.
Airbnb’s cofounders join Dropbox cofounder Drew Houston and WhatsApp cofounders Jan Koum and Brian Acton as recent tech entrepreneurs to join the billionaire ranks. When the round closes, Blecharczyk will become among the world's youngest, a group which includes Facebookers Mark Zuckerberg and Dustin Moskovitz and 24-year-old Hong Kong citizen Perenna Kei.
With additional reporting by Tomio Geron.
Follow Alex on Forbes, Twitter and Facebook. Follow Ryan on Twitter at @RMac18 or email him at rmac@forbes.com.
