AirBnB has quickly become a household name, no pun intended.

The peer-to-peer home-sharing platform was founded in Silicon Valley in 2008 as airbedandbreakfast.com. It was initially scoffed at by investors, who thought the idea would never catch on, given that people already had so many hotel options. 

For example, Union Square Ventures co-founder Fred Wilson wrote in 2011 that he passed on AirBnB because he couldn't picture it working: "We couldn't wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal," he said. "Others saw the amazing team that we saw, funded them, and the rest is history."

In the summer of 2008 alone, the company and its three founders were rejected or ignored by 15 angel investors. However, their big break was coming -- thanks to cereal and some quick thinking. 

AirBnB chief executive Brian Chesky speaks onstage in front of a backdrop of different trips around the world

AirBnB chief executive Brian Chesky speaks onstage at Airbnb Open LA on November 17, 2016 in Los Angeles, California. Image source: AirBnb.

 

Funding Rounds

The Air Bed and Breakfast team hit an unexpected pot of gold during the 2008 Democratic National Convention in Denver. Since their room rental website wasn't making money, they decided to sell cereal titled "Obama O's" and "Cap'n McCains" for $40 per box. Each box contained information about their room-sharing company, and the offbeat business move ended up generating $30,000. 

Soon after, venture capitalist Paul Graham invited the team to join start-up accelerator Y Combinator, which gave them a $20,000 seed investment in return for a 6% stake in the company. The incubator became their home for the next three months.

During this time in early 2009, the team finally shortened the name to the catchier "AirBnB." The name change looked to be a good move because a month later they got a second seed investment of $600,000 from Sequoia Capital. 

In total, AirBnB has raised $4,398,082,100 over 12 funding rounds, which are detailed in the chart below using data from crunchbase. 

Date Transaction Name Number of Investors Money Raised Lead Investors
Jan. 1, 2009 Seed Round 1 $20,000 Y Combinator
April 1, 2009 Seed Round 2 $600,000 Sequoia Capital
Nov. 10, 2010 Series A 8 $7,200,000 Greylock Partners
July 25, 2011 Series B 8 $112,000,000 Andreessen Horowitz
October 28, 2013 Series C 5 $200,000,000 Founders Fund
April 16, 2014 Series D 6 $475,000,000 NA
Jan. 1, 2015 Series D NA NA NA
June 28, 2015 Series E 14 $1,500,000,000 General Atlantic, Hillhouse Capital Group
Nov. 20, 2015 Private Equity Round 1 $100,000,000 FirstMark
June 16, 2016 Debt Financing 4 $1,000,000,000 JP Morgan Chase & Co.
Sept. 22, 2016 Series F 5 $555,462,100 CapitalG, TCV
March 9, 2017 Series F 4 $447,800,000 CapitalG, TCV

Data and table source: Crunchbase.

AirBnB's Current Valuation

After AirBnB's latest funding round of $447.8 million that closed off its Series F in March 2017, the company boasts a $31 billion valuation. Previously, the company said it was valued at $30 billion after its first Series F funding round of $555,462,100 in September 2016.

The company first became profitable in the second half of 2016, sources told Bloomberg in January 2017. For the latest quarter, AirBnB generated $1 billion in revenue, up from $500 million in the same period last year, Bloomberg reported in early November.  

With a quarter like that, a public offering could be on the table for as early as 2018. That squares with AirBnB CEO Brian Chesky's statrment back in March that the company was halfway through the two-year process of taking itself public. 

"We're probably about halfway through that project, as far as just being ready to go public," he said at a luncheon hosted by the Economic Club of New York. "But at that point, our investors are very patient. None of them are anxiously waiting for us to go public."

AirBnB's Competitors' Valuations

AirBnB is currently the second-most-valuable venture-backed U.S. start-up, according to data from PitchBook. Uber claims the top spot with a valuation of $68 billion. However, AirBnB's valuation still looms high. Keep in mind that AirBnB has raised over $4 billion and still not gone public. 

Meanwhile, Tripping.com, founded in 2010, has raised a total of $52 million over four funding rounds. HomeAway, founded in 2005 and owner of popular vacation rental site VRBO, had only raised $510.3 million before it went public. 

HomeAway, which is considered AirBnB's biggest competitor, was valued at $2 billion at its IPO in 2011. Travel site Expedia (NASDAQ:EXPE), which now has a market cap of $19.34 billion, acquired the company in 2015 for $3.9 billion.

In 2004, Booking.com was acquired for $161 million by Priceline Group (NASDAQ:PCLN), which today boasts a market cap of $86.27 billion.   

AirBnB's name recognition and ease of use have helped it build a leadership position in its sphere. However, there's plenty of room for others in the niche, considering the global vacation rental market size is expected to reach $193.89 billion by 2021, according to market research company Technavio.

Natalie Walters has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Priceline Group. The Motley Fool recommends Expedia. The Motley Fool has a disclosure policy.