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The case of Airbnb: from start-up to tech unicorn.

Posted by: Lorna Blackmore
15/08/2016

This week a news story in the Financial Times caught my attention; Airbnb has apparently raised $850m in its latest funding round, a move that could see it become the world's fourth most valuable tech start-up.

The cash injection places the value of the company at the $30bn mark and could help it claim a higher spot on the popular list of so-called tech 'unicorns' which refers to companies which are deemed to have a value of $1bn or more. Investors in the Airbnb funding round have not been revealed, but the move comes as the company looks to position itself as a brand-building channel.

There are no doubts that Airbnb has revolutionised the hospitality and travel industry, with almost 80,000 British home owners earning income by renting part or all of their homes and the number is doubling each year. As a matter of fact, the online marketplace that enables people to list, find and then rent vacation homes for a processing fee now has over 1,500,000 listings in 34,000 cities and 191 countries.

Founded in 2008 in San Francisco, California, by two designers, Brian Chesky and Joe Gebbia, and a technologist, Nathan Blecharczyk, in 2008, Airbnb is now the granddaddy of what has come to be known as the "sharing economy”, a term for the socio-economic ecosystem built around the sharing of human, physical and intellectual resources.

Airbnb started when roommates Chesky and Gebbia could not afford the rent for their loft in San Francisco. To make ends meet, they made their living room into a bed and breakfast, accommodating three guests on air mattresses and providing homemade breakfast. The original site offered, in fact, short-term living quarters, breakfast, and a unique business networking opportunity for attendees to the Design Trade Show who were unable to book a hotel in the saturated market.

Since that day Airbnb, originally launched to the market as “Airbedandbreakfast.com”, takes a booking every two seconds and there are now 300,000 rooms, apartments and houses listed on the site (including 500 castles, 200 tree houses and 1,400 boats).

CAN WE ALL BENEFIT FROM THE AIRBNB SHARING ECONOMY?

There are two main categories of people who risk negative consequences by using Airbnb; home owners and subletting tenants.

Home owners letting a property directly run the risk of invalidating the terms of their mortgage, meaning that in a worst-case scenario a lender could ask for full repayment.“Often a mortgage arrangement won’t allow you to sublet the property – so depending on the terms of the mortgage you run the risk that your mortgage company would take action,” said Samantha Blackburn, head of residential property at law firm Slater & Gordon.

Tenants who sublet without telling their landlord risk eviction or having to pay compensation. The risks for the landlord are serious too as there may be damage costs if the holiday makers mistreat the property.

If the sublet makes the property into a large “house in multiple occupation”, which is a property where at least five people live in more than one household over three or more storeys and share facilities like the bathroom and kitchen, a landlord could be fined up to £20,000 by the local authority for not being licensed.

There is definitely an economic revolution that Airbnb is spearheading; and it's happening in people's bedrooms.

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