Airbnb’s $1B fundraise comes with a hefty valuation cut

The terms of Airbnb’s billion-dollar fundraise have come out and it’s not pretty.

The home-sharing company agreed to pay its new investors, private-equity firms Silver Lake and Sixth Street Partners, an interest rate of more than 10 percent, the Wall Street Journal reported.

The deal also included warrants that investors can convert to receive stock and valued Airbnb at $18 billion — a stark drop for the company last valued at $31 billion after a 2017 funding round.

Sources told the Journal that a verbal agreement was also put in place for Airbnb to trim its fixed costs and add new management to its ranks in order to assist CEO Brian Chesky.

Silver Lake and Sixth Street released a joint statement contesting that: “There was no such ask or commitment and in fact a major part of our decision to invest was because of our confidence in the leadership of the company.”

The funding round comes as Airbnb has tried to stem losses as the coronavirus pandemic has ground tourism to a halt and prompted the company’s bookings to tank. The company suspended all marketing, paused hiring and called for federal aid. Meanwhile, the company has faced a backlash from hosts in light of changes to its cancellation policy.

Before the health crisis, Airbnb had been planning for a 2020 initial public offering. [WSJ] — Erin Hudson

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