Airbnb’s latest funding haul has surpassed all expectations. The company was said last summer be seeking up to $850 million in a round that would value it at $30 billion. In September, a filing showed Airbnb had raised $555 million.
According to a new filing on March 9, Airbnb ultimately received more than $1 billion in its Series F financing, for a valuation of $31 billion. That solidifies its position as the world’s fourth-most valuable startup and puts it on the heels of Chinese ride-hailing firm Didi Chuxing, which is valued at close to $34 billion.
The $31 billion valuation also makes Airbnb second only to Marriott International on paper among traditional hospitality competitors.
The update on Airbnb’s Series F coincided with another report: The company, per a Reuters source, has “no plans to go public anytime soon.”
That’s despite the fact Airbnb is an attractive candidate to go public. It became profitable for the first time in 2016. It’s projecting earnings (before interest, taxes, and depreciation) of a whopping $3.5 billion by 2020. By contrast, Uber lost about $3 billion last year by a similar measure.
So why stay private? Going public is a headache. It requires all sorts of disclosures and investor transparency that most technology startups don’t want or need to deal with. These days, private companies tend to be driven into the public markets either because they need a new source of funds, or face pressure from investors and employees who are looking to cash in.
Airbnb arranged a stock sale for employees last summer to alleviate some of that pressure. The company had also secured $3.5 billion before raising this latest $1 billion. Access to capital is hardly a problem.
2016 was a dismal year for initial public offerings. 2017 is supposed to be better. After Snapchat parent Snap debuted on the New York Stock Exchange last week—popping 44% on opening day—investors are looking for more startups to follow. (The market’s enthusiasm for Snap has since cooled, with shares down 23% from the high of $29.44 they reached on March 3.)
With nearly 200 “unicorns”—private tech companies valued at $1 billion or more—there’s no shortage of IPO candidates. But while Airbnb may be motivated to stay private while it further improves its financials and clears up some outstanding legal issues, it offers a study in why a pickup in the IPO market might not happen: Private funding is still a perfectly good option.
Private equity funds were sitting on $754 billion of uninvested money as of June 2016, and venture capital funds had $121 billion. Those investors have grown a little pickier in deploying their funds, but only with early-stage startups. The biggest and most mature startups are doing just fine. So long as they have that stream of cash to call on—like Airbnb, WeWork, and plenty of others—why take the IPO plunge?