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This VC went long on HotelTonight and it paid off; here’s how.

Posted by on Mar 10, 2019 in Accel Partners, battery ventures, brian omalley, forerunner ventures, HotelTonight, TC, Venture Capital | 0 comments

Brian O’Malley has enjoyed a lot of success as a venture capitalist, thanks to bets on Bazaarvoice before its IPO, Dollar Shave Club before it was nabbed by Unilever, and a variety of other startups that were ultimately acquired or went public. It’s one reason that O’Malley, who began his venture career with Battery Ventures and stayed for nearly a decade, has been poached time and again, first joining Accel Partners for almost five years and, more recently, hopping over to Forerunner Ventures.

Interestingly, all three firms are investors in one company that O’Malley has known from nearly its outset and whose cash and stock sale for a reported $465 million to Airbnb, announced last week, he is still celebrating: HotelTonight, “The O’Malley family went long on HotelTonight,” he said in a call Thursday. “Now, we’re long Airbnb.”

For your Sunday reading, we thought you might enjoy an oral history from O’Malley about how he stumbled upon HotelTonight and remained connected to the company across its nine year history.

I’d originally met Sam [Shank HotelTonight’s CEO] way back. He had TravelPost,com, a travel blogging platform. I really liked him, but i didn’t think it was a ‘venture fundable’ company, [meaning I didn’t see] an explosive opportunity. But Sam is the kind of guy you file away in the back of your head. I knew I’d like to work with him sometime.

Then, I think it was the last week of 2010, I was at home reading up on new things and I came cross this announcement about this new thing called HotelTonight. I was looking at mobile services at the time. We [at Battery Ventures] were invested in Groupon and we saw how much customers loved this whole last-minute-deal angle. But it was hard for Groupon to [drill deep] across categories, given that merchant needs are different. The industry needed verticalized [players] and [HotelTonight] fit nicely in that sweet spot, so I did a little digging, and lo and behold, it was Sam Shank and his partner Jared [Simon] behind the company. I reached back out to Sam and said, ‘This is a great idea; I’d love to catch up with you.’

They were [running a company called] Dealbase [that aggregated and compared hotel deals] and HotelTonight was their mobile offering, so I got together with him and we set it up in a way where we wrote a [letter of intent to Dealbase’s angel investors] to spin HotelTonight out of Dealbase and make it its own company. But to do that, we wanted not just the technology but the team.

They had pretty well-known angels, so I went and talked with them, and some of them were not very excited about having the team go to this new company, so we set up this structure where Dealbase shareholders would get 50 percent of HotelTonight if they came over, and if they didn’t want to come over, we’d buy their shares. I think all of them came over eventually, though some were more curmudgeonly about it. Hopefully they appreciate it now! Then we put together a large option pool for the team and put together a syndicate, including myself at Battery, Theresia [Gouw] when she was at Accel, Kent Goldman [then of First Round Capital], and Kirsten [Green, the founder of Forerunner Ventures] was a small investor as well. And that’s what helped start the company.

At the time, I was one of the first customers, and I remember checking into one of their hotels in New York, and the hotel had never heard of HotelTonight but there on the fax machine was my booking reservation; that was the technology that was available at the time.

Then we [at Battery] led the Series A, we split it with Accel. I was already on the board from the seed round, then Theresia joined the board at the Series A.

When I left Battery [to join Accel] it was the smoothest transition. When you leave a firm, you leave behind [your companies]; your investments belong to the fund and not to you. But this was more seamless because Theresia was transitioning out of Accel [to start her own firm, Aspect Ventures] around the time that I was joining. So I think I was off the [HotelTonight] board for about a month. Then I took Theresia’s seat at Accel and [longtime Battery investor] Roger Lee went on my seat. Then at Accel, we led HotelTonight’s last round of financing.

It’s kind of serendipitous that all three firms where I’ve worked were shareholders.

[As for the outcome of the company], we’d talked about an IPO a while ago. It was growing really quickly. It’s a large business now with well over a hundred million [dollars] in [annual] revenue. It’s profitable. It has a lot of the characteristics you’d want. And they’d been approached by a variety of partners over time. But Sam and [Airbnb CEO] Brian [Chesky] have a special relationship. They’d known each other since even before HotelTonight.

And it’s great when you can clearly fill a void, and continue your mission under a bigger umbrella. Airbnb is rapidly growing a good business. It has done a great job of winning the hearts and minds of customers. But it had a gap in that it hadn’t focused on hotels and last-minute travelers, and it gets a lot of interest in those areas, so we thought the companies culturally would really complement each other, but also that the products would complement each other.

Decisions are always led by the team, and this is one where they were really excited about it, and we were super supportive of that. It’s the funny thing about all these deals, though. Yes, you can get a banker like Qatalyst [Partners] involved.  But a lot of it comes back to relationships.


Source: The Tech Crunch

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Airbnb agrees to acquire last-minute hotel-booking app HotelTonight

Posted by on Mar 7, 2019 in Airbnb, Australia, battery ventures, Europe, First Round Capital, forerunner ventures, Fundings & Exits, Gaest, greg greeley, HotelTonight, Lyft, M&A, Pinterest, Sam Shank, San Francisco, Startups, TC, Uber, unicorn, vacation rental, Venture Capital | 0 comments

As Airbnb gears up for its big leap into the public markets, it’s expanding its accommodations platform to include more than just treehouses and quirky homes.

Today, the company has confirmed its intent to acquire HotelTonight, the developer of a hotel-booking application that lets travelers arrange last-minute accommodations. The deal was previously reported by The Wall Street Journal, which wrote in January that negotiations for the transaction had “gone cold.”

Airbnb is expected to complete an initial public offering as soon as this year, though co-founder and chief executive officer Brian Chesky has refrained from revealing a specific timeline. Like Uber, which plans to become the ultimate transportation company, Airbnb’s long-term ambition is to build an end-to-end travel platform complete with home sharing, hotel booking, business travel arrangements, experiences and more.

Airbnb declined to disclose terms of its HotelTonight acquisition. Once the deal is complete, the HotelTonight app and website will continue to operate independently, with co-founder and CEO Sam Shank reporting to Airbnb’s president of homes, Greg Greeley.

“We started HotelTonight because we knew people wanted a better way to book an amazing hotel room on-demand, and we are excited to join forces with Airbnb to bring this service to guests around the world,” Shank said in a statement. “Together, HotelTonight and Airbnb can give guests more choices and the world’s best boutique and independent hotels a genuine partner to connect them with those guests.”

Founded in 2010, San Francisco-based HotelTonight garnered a valuation of $463 million with a $37 million Series E funding in 2017, according to PitchBook. In total, the startup has raised $131 million in venture capital funding from Accel and Battery Ventures, which have participated in nearly every funding round for HotelTonight. Other early investors include Forerunner Ventures and First Round Capital.

Airbnb, for its part, was valued at $31 billion in 2017, with a $1 billion round. In January, Airbnb said it was profitable for the second consecutive year on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis.

HotelTonight offers discounts at hotels in the Americas, Europe and Australia. The company partners with hotels to offer un-sold rooms, catering to business travelers or those looking to make last-minute arrangements. The deal will make it easier for Airbnb users to book hotels without planning weeks or months in advance and will help Airbnb expand its community beyond short-term rental hosts and guests.

Airbnb introduced boutique hotels to its platform in early 2018 and has boasted its quick growth. In 2018, the business said it more than doubled the number of boutique hotels, bed and breakfasts, hostels and resorts available. Airbnb’s business travel unit, Airbnb for Work, also had quick success. Launched in 2014, it now accounts for 15 percent of bookings. In total, Airbnb offers some 5 million places to stay in 191 countries.

Airbnb is kicking off 2019 with an acquisitive streak. In January, the company acquired Danish startup Gaest, a provider of a marketplace-style platform for people to post and book venues for meetings and other work-related events. The company again declined to pinpoint the price, though given Gaest had raised just $3.5 million in equity funding, the deal pales in comparison to Airbnb’s HotelTonight acquisition.

2019 is stacking up to be a particularly busy year for unicorn IPOs, some of which were likely delayed by a weeks-long government shutdown at the start of the year. Lyft, which recently unveiled its S-1, is poised to be the first billion-dollar company to exit to the stock markets, followed by Uber, Slack and Pinterest. Will Airbnb nudge its way into that lineup? We’ll see.


Source: The Tech Crunch

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