TPG Said to Lean Against Airbnb Investment at $10 Billion Value

Apr 03, 2014 6:37 pm ET

April 3 (Bloomberg) -- TPG Capital is leaning against investing in room-sharing startup Airbnb Inc. at a $10 billion valuation, people with knowledge of the discussions said, in a sign that some investors are pushing back against Silicon Valley’s frothy startup funding environment.

TPG has been in talks to invest in San Francisco-based Airbnb, which is raising about $450 million in a financing that would put its value at $10 billion, people familiar with the situation said last month. TPG, which was set to lead the funding with Dragoneer Investment Group, has pushed Airbnb to lower its valuation, among other issues, said one of the people, who asked not to be identified because the talks are private.

TPG hasn’t made a final decision over whether to do the funding, said the person. Airbnb, which was valued at $2.5 billion in a 2012 financing, is still attracting interest from other investors that will help complete the deal, said other people with knowledge of the discussions.

TPG’s hesitation contrasts with the rush from hedge funds, mutual fund companies and corporate investors, which have poured money into a slew of fast-growing Silicon Valley startups.

Startup Megadeals

There have been at least 11 nine-figure fundings in technology companies so far this year, according to data compiled by Bloomberg, with most of the recipients of the cash landing $1 billion-plus valuations. Among those were big data startup Cloudera Inc., which raised $900 million at a $4.1 billion valuation, and online-storage company Dropbox Inc., which garnered $250 million at a $10 billion valuation.

Owen Blicksilver, an outside spokesman for TPG, declined to comment, as did Kim Rubey, a spokeswoman for Airbnb.

Founded in 2008 by Brian Chesky, Joe Gebbia and Nathan Blecharczyk, Airbnb lets users rent out a couch, bedroom or house and makes money by charging a fee for each transaction. The company has listings in more than 34,000 cities, according to its website. Airbnb has raised around $326 million from venture-capital firms including Sequoia Capital, Greylock Partners and Founders Fund.

At $10 billion, Airbnb would join the ranks of the most highly valued private U.S. technology companies, which includes Dropbox and Palantir Technologies Inc. It would also be worth more than twice as much as publicly traded vacation-rental site HomeAway Inc.