Is Airbnb WeWork's Next Victim?

Following the WeWork saga, you better believe that fellow private tech companies on the road to IPO will be under a microscope. One such unicorn is Airbnb, the home-sharing giant planning an initial public offering in 2020.

Airbnb posted some major losses though, according to a report in The Information. The company’s operating loss more than doubled in the first quarter to $306 million from the year-earlier period. The loss resulted in part of a sharply increased investment in marketing. While that spending could bring in a lot of new business, prospective investors could be unnerved if subsequent quarters show similar losses, the report says.

According to the story, which cited undisclosed financial data, Airbnb’s sales and marketing investments rose 58% year over year to $367 million in the first quarter and marketing spend is expected to come in above the $1.1 billion spent in 2018. Revenue reportedly grew 31% from a year earlier to $839 million, while expenses increased to 47%.

People have been speculating that Airbnb’s debut could be met with lukewarm enthusiasm, but it’s not fair to compare it to WeWork, Uber, or Lyft. Over the years, Airbnb has proven to be much more conservative in its spending during its 11-year-history compared to other fast-growing startups.

In 2017 when Airbnb raised a whopping $1 billion in funding, a source close to the company told me the company has “operational flexibility.” This flexibility came from its billion-dollar funding round and from the fact that it turned profitable on an EBITDA basis in the second half of 2016, and has been ever since. It has also been reported that Airbnb surpassed $1 billion in revenue in the second quarter of 2019.

Airbnb is reportedly sitting on more than $3 billion, which is down from about $3.5 billion as of the end of March, according to CNBC.

We can speculate all we want, but Airbnb’s S-1 will be the ultimate source of truth.

DELAYED: Another day, another delayed IPO. This time it’s Saudi Aramco, the world’s largest oil company that hoped its initial public offering would be the world’s largest-ever listing. Aramco had been expected to announce its IPO plans on Sunday, and publish the offering prospectus around Oct. 25, but now it will delay its public market debut until December or January, according to The Wall Street Journal.

“It is a last minute decision,” a senior Saudi official told The Journal. “A few things needed to be fine tuned including financial figures for the third quarter.”

Aramco was hoping to land a $2 trillion valuation, though analysts pegged it at closer to $1.5 trillion. The company was planning a two-part listing on its domestic stock market to ensure that the exchange could absorb what would be the kingdom’s largest initial public offering.

VENTURE DEALS

Pensando Systems, a San Jose, Calif.-based edge computing company, raised $145 million in Series C funding. Hewlett Packard Enterprise and Lightspeed Venture Partners led the round.
Galileo, a Salt Lake City, Utah-based API standard for card issuing programs, raised $77 million in funding. Accel led the round, and was joined by investors including Qualtrics co-founder and CEO Ryan Smith.
Curiox Biosystems, a Singapore-based bio-instrumentation company, raised $15 million in Series B funding. Investors include KB Investment, IMM Investment, QUAD Investment, HB Investment, DAYLI Investment and SV Investment.
Winnow, an Iowa City-based provider of AI tools for chefs, has secured $12 million in Series B funding. Investors include Ingka Group,Mustard Seed, Circularity Capital, D-Ax and The Ingenious Group.
Versameb AG, a Switzerland-based bio-pharmaceutical company, raised CHF 6.4 million ($6.5 million) in funding. The investors were not named.
Sistine Solar, a Somerville, Mass.-based provider of solar panels, raised funding of an undisclosed amount. Investors include Energy Foundry, MassCEC and Thin Line Capital.
Verady, an Atlanta-based cryptocurrency accounting and audit platform, raised funding of an undisclosed amount. TTV Capital led the round, and was joined by investors including Fenbushi Capital.

HEALTH & LIFE SCIENCES DEALS

ArsenalBio, a South San Francisco-based developer of a cell therapy company, raised $85 million in Series A funding. Investors include Westlake Village BioPartners, the Parker Institute for Cancer Immunotherapy, Kleiner Perkins, the University of California, San Francisco Foundation Investment Company, Euclidean Capital and Osage Venture Partners.

PRIVATE EQUITY DEALS

Warburg Pincus made an investment in Softeon, a Herndon, Va.-based provider of supply chain software. Financial terms weren't disclosed.
Express Script, a portfolio company of Ignitions Partners, acquired Verity Solutions, a Kirkland, Wash.-based provider of 340B software and services. Financial terms weren't disclosed.
Charlesbank Capital Partners acquired WolfePak Software, an Abilene, Texas-based provider of enterprise resource planning, operational and regulatory compliance software to the oil and gas industry. Financial terms weren't disclosed.

OTHER DEALS

Atlassian acquired Code Barrel, an Australia-based maker of Automation for Jira, a tool for simplifying routine operations in Jira without writing code. Financial terms weren't disclosed.

IPOs

Innate Pharma, a Marseille, France-based commercial-stage biotech for cancer antibody therapies, raised $69 million in an IPO of 12.5 million shares priced at $5.50 apiece. The firm posted revenue of €94 million ($103.5 million) in 2018 and income of €3.1 million ($3.4 million). Novo Nordisk (13.9% pre-offering), MedImmune (9.8%), and Bpifrance (6.9%) back the firm. It plans to list on the Nasdaq as “IPHA.” Read more.
Ferretti, the Italian luxury yacht maker, canceled its IPO, per Reuters.