Airbnb Is Raising A Big Third Round, Aiming For A Valuation North Of $2B

It’s the darling of “sharing economy” startups, Y Combinator and a good portion of Silicon Valley’s top investors, and a symbol of consumer web startups moving beyond entertainment to solve real life problems. Now we’re hearing short-term room-renting site Airbnb is also something else — one of the very few name-brand startups raising a massive new round of funding these days.

We slipped this rumor into a panel discussion at Disrupt a couple weeks ago, actually, but we’ve been busy collecting more details. Here’s what we’ve got so far: the San Francisco company is raising around $100 million in a third round of funding at a valuation “north of a billion” between $2 billion and $3 billion. While many of its lengthy list of current investors are considering participating, we’re told, a new firm is coming in to lead the outside round.

What’s the attraction, in the troubled-tech-IPO reality of today? The kind of revenue growth that investors want to see. The company takes an average of 10% on every transaction, according to sources familiar with the business (corroborated by various other sources over the years). Bookings have been doing the old hockey-stick: 2 million total in June of 2011, 5 million in January of this year, and 10 million this past June, the company has announced over time.

Assuming that the company can retain the same growth momentum, if one makes the conservative assumption that cheaper listings are more popular — say, an average night’s stay at $70 — it could be grossing annual revenue of around $168 million. If you go higher, say by estimating an average rental rate of $100 (like what Reuters reported in July 2011), you get $240 million.  These revenue estimates bode well for the raise, as the company can justify a solid valuation and good terms.

If bookings continue to grow like they have, the company could hit a total of around 29 million bookings, including 24 million this year.

Our back-of-the-envelope calculations aren’t precise, of course, but they tell the story that matters. Demand for the product (easy, socially verifiable short-term listings) has continued to grow with its ambitious plans for expansion, with the company able to extract a reliable amount of money from each additional booking. The challenges of this mainly international expansion means it’ll need more cash in its coffers, and hence a new raise.

The company has already amassed a total of $120 million at a valuation of more than $1 billion as of its second round.

Romain Dillet contributed to this article.