Airbnb gets a $1 billion lifeline
Dear unicorn: Is Silver Lake your coronavirus-era Warren Buffett?
Airbnb has found some relief after reeling from the coronavirus’s brutal impact on the travel industry.
On Monday, the company announced that it had raised $1 billion in debt and equity from private equity shop Silver Lake and investment firm Sixth Street Partners. Airbnb reportedly cut its valuation internally from $31 billion to $26 billion as consumers cancelled reservations.
One name that jumps out: Silver Lake co-CEO Egon Durban. In roughly the last month alone, the investor jumped into two companies that were under pressure. Twitter, dogged by activist investors, and Waymo, a moonshot for Alphabet.
Oh right, he’s also here in the Airbnb announcement: “While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring.”
As Fortune’s Adam Lashinsky puts it: “In the financial crisis of 2008-09, Warren Buffett’s Berkshire Hathaway was here, there, and everywhere, providing capital to stressed but otherwise sound companies…Today, Egon Durban’s private-equity fund Silver Lake seems to be playing a similar role.”
Private equity firms at large are sitting on a record amount of undeployed cash, and are now actively looking for deals in sectors hit by the coronavirus outbreak—sectors that will ostensibly bounce back once the pandemic is resolved.
So, dear unicorns and public tech companies…who’s next?
Separately, the Airbnb deal raises a lot of questions:
–The valuation. While it’s been reported that the company had lowered its valuation from $31 billion to $26 billion internally, Airbnb has declined to comment on the terms of the most recent deal.
–Airbnb’s plans to go public. The company had planned to go public this year. Airbnb was said to be considering either an IPO or a direct listing—a way of going public that doesn’t issue new shares or raise new capital. Those plans are in murkier waters now.
–Employee equity. There’s another reason why Airbnb felt the need to go public this year. Airbnb reportedly meted out two tranches of employee stock options—one of which expires November 2020. That equity will reportedly become worthless should the company still be private by then.
Dear readers: As we all try to understand who is eligible for the Small Business Administration’s Paycheck Protection Program, I wonder, are any venture capital firms thinking about waiving certain governance rights, so that their startup may qualify? Let me know if you’ve got tips.
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