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Airbnb on way to becoming $10b startup

Booking website enlisting another set of investors

Airbnb, whose chief executive is Brian Chesky, assists people in renting out their homes.

Denis Balibouse /Reuters

Airbnb, whose chief executive is Brian Chesky, assists people in renting out their homes.

Airbnb Inc. is poised to join the 11-digit club.

The company, which was created nearly six years ago as a way to help people find spare rooms and couches to sleep on, is in advanced talks to raise more than $400 million in capital, a round of financing that would value it at more than $10 billion, people briefed on the matter said Thursday.

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Such a valuation would surpass that of Hyatt, the 57-year-old hotel stalwart, and make Airbnb the latest technology startup firm to gain an eye-popping net worth. Investors hungry for a piece of the fastest-growing startups have opened their wallets, hoping to get even a small piece of the action before what they hope will be a giant payday.

But Airbnb, a centerpiece of what has become known as “the sharing economy,” is also drawing increasing scrutiny from regulators concerned about safety, rental laws, and tax collections. The company has become a point of contention among landlords, too.

Leading the potential new fund-raising round is TPG Growth, the investment firm that already has a stake in the car-ride service Uber, the people briefed on the matter said. Other prospective investors include the Dragoneer Investment Group and T. Rowe Price, one of these people added.

The discussions, which were first reported by The Wall Street Journal, may still fall apart, these people cautioned.

Despite murmurs of a new technology bubble, valuations appear to be rising unchecked. Last month, Facebook — itself worth nearly $170 billion — paid more than $16 billion for the messaging service WhatsApp, a bid that some analysts have described as reasonable given the acquired company’s growth prospects. Dropbox, a provider of online storage, has been appraised at about $10 billion, while Palantir, a data analysis firm, has raised money at a $9 billion valuation.

“We’re seeing valuations go nuts,” said Jim Ellis, a lecturer at Stanford’s Graduate School of Business.

Even so, Ellis conceded that many of the companies now in the limelight were a far cry from those that rose and fell during the dot-com bubble. Many now have business models that can lead to sustainable revenue and profits.

Airbnb appears to be one of them. Founded in the summer of 2008, the company has since become one of Silicon Valley’s most celebrated — and one of its most disruptive. Its marketplace lets people rent out their homes, from couches to entire houses, drawing an estimated 11 million guests in more than 34,000 cities.

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