GOOG Alphabet Inc

By Maureen Farrell and Greg Bensinger 

Airbnb Inc. has brought on Alphabet Inc.'s growth-equity arm as an investor, part of an expected $850 million round that values the home-rental company at $30 billion, people close to the deal said.

In addition to the new cash, employees who have been with the company for more than four years had the opportunity to sell common shares to investors as part of the deal. Roughly $200 million of employee stock was sold as part of that fundraising, these people said.

Google Capital and growth-equity firm Technology Crossover Ventures co-led the round, the people said, valuing the company at $105 a share, higher than the $93.09 a share investors paid in last year's round that put Airbnb's valuation at $25.5 billion.

Investors bought the employee stock at a discount -- last year's $93.09 a share price -- because the common stock doesn't grant investor protections like preferred stock does, the people said.

Airbnb may accept more funding from additional investors in the round, two people familiar with the matter said.

The deal is designed in part to relieve some of the pressure to go public, as the company will have more funds to spend on expansion overseas, and can give longer-term employees the option to get cash for some of their shares, the people said.

Airbnb has indicated it is unlikely to go public in 2017, one person said, as the company still has many regulatory challenges to surmount before it has a clearer vision of its longer-term growth prospects and costs.

Airbnb helps people find dwellings, often private homes, for overnight stays through its online marketplace. As the company has expanded to 34,000 cities world-wide, it has faced opposition from hoteliers, local governments and neighborhood associations over taxes and safety regulations. Airbnb has fought back, suing a number of cities including San Francisco in recent months over plans to block the company for unregistered apartment rentals.

Airbnb is also under fire over what some contend is a blind eye to discrimination after some travelers claim they were denied lodging because of their race or sexual orientation. The company this month released guidelines to combat the charges, including additional diversity training and less-prominent customer photographs on its site. It also hired former U.S. Attorney General Eric Holder as an adviser.

At $30 billion, Airbnb is the fourth-most valuable venture-backed tech company in the world, after ride-hailing services Uber Technologies Inc. and Didi Chuxing Technology Co. and Chinese handset maker Xiaomi Corp. The new fundraising comes as venture-capital investors scrutinize the valuations of many highflying private companies amid a volatile public market and uncertainty in the global economy.

Airbnb sought new investors for this round and asked existing investors not to participate, two of the people said. As demand for this round was high, Airbnb was able to select investors deemed as strategic to the company's broader goals, the people said. The Wall Street Journal reported in June that Airbnb turned down financial investors, including mutual funds who were willing to invest at a valuation as high as $34 billion.

Airbnb is backed by some two dozen investors ranging from U.S. venture-capital firms Sequoia Capital and Andreessen Horowitz to international groups including China Broadband Capital and Temasek Holdings.

The company also has at least six mutual-fund companies as investors, including Fidelity Investments, T. Rowe Price Group and Morgan Stanley Investment Management. As of June, the six funds had valued their shares at a wide range, from $90.54 to $130.59, according to The Wall Street Journal's Startup Stock Tracker.

Mutual funds estimate the value of privately traded shares based on a number of factors, including the price paid and the valuations of publicly traded peers.

Founded in 2013, Google Capital typically writes larger checks and invests in later-stage rounds than Google Ventures, Alphabet's venture-capital arm. Among Google Capital's investments are Care.com Inc., Credit Karma Inc., SurveyMonkey and LendingClub Corp.

Write to Maureen Farrell at maureen.farrell@wsj.com and Greg Bensinger at greg.bensinger@wsj.com

(END) Dow Jones Newswires

September 22, 2016 15:38 ET (19:38 GMT)

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