November 11, 2008
HomeAway Closes $250M Financing Round
Online vacation rental service company HomeAway Inc has raised $250 million to fund its growing operations, the company said.
The latest round of private financing comes from venture capital firms Technology Crossover Ventures, Institutional Venture Partners and Redpoint Ventures.The additional investment brings to $405 million the total amount of funding the Austin, Texas-based company has raised since its inception in 2005. The company did not disclose what stake these investors now hold in the company, but said the new funding represents a minority investment.
Brian Sharples, HomeAway's founder and CEO, said he was nervous about securing the latest financing given the current economic climate. However, he said investors were able to see that the company is performing well despite "a pretty bad quarter of economic news."
The company generates its revenue from people who typically pay $299 a year to list a vacation rental property. HomeAway's Web sites, which include GreatRentals.com and VacationRentals.com, are expected to end the year with roughly 325,000 paid listings, an increase from last year's 257,000 listings.
Sharples said a spike in building, construction and home purchasing initially drove the company's growth. However, the company is now benefiting as vacation homeowners seek additional income by renting out their places. And consumers are more interested because vacation rentals can often be less costly than other alternatives. For instance, a family can rent a house for a week for less than it would cost to stay in a hotel in many popular destinations.
"We've always had a hunch that more people would start renting if times got tough," he told the Associated Press.
The company used $88 million of the latest financing to pay off debt, and it will also use some of the new funds to ramp up marketing, Sharples said. Additionally, it will buy back shares to reward workers with vested stock options at a time that is less than ideal for taking the company public, said Sharples.
The company may also use the capital to acquire new Web properties in international markets, Sharples said. Currently, HomeAway has sites that serve Britain, France and Germany, but has no presence in places like Australia, Asia or the Middle East.
Technology Crossover Ventures, which also helped finance online travel companies Expedia Inc. and Orbitz Inc., supplied $175 million of the latest funding, with $45 million provided by Institutional Venture Partners and $30 million contributed by Redpoint Ventures.
Woody Marshall, a general partner at Technology Crossover Ventures, said the firm was impressed by HomeAway's momentum. Indeed, revenue from continuing operations has been growing more than 50 percent.
On the Net: