HomeAway, Inc., online rental specialist, today announced it has completed a $250 million equity capital raise, a record investment that reinforces the company’s position in travel’s fastest-growing segment.Led by Technology Crossover Ventures (TCV) and with existing investors Institutional Venture Partners (IVP) and Redpoint Ventures, this financing represents the largest minority investment of a U.S. Internet company in the last eight years, according to Venture Source.
HomeAway® will use proceeds from the investment to fund additional strategic investments, eliminate all debt and provide working capital for increased marketing and promotions. The company will also introduce a share repurchase program for certain shareholders including tenured employees.
“We are very pleased to secure this major round of funding, particularly during the current financial crisis that is increasingly restricting access to capital for many companies. And we’re especially excited to join forces with TCV to help us execute our long-term growth strategy,” says Brian Sharples, chief executive officer and founder of HomeAway. “The TCV lead investment demonstrates their confidence in our business model, and the extraordinary potential in front of us. We expect to benefit tremendously from their experience and record in building leading consumer Internet and travel companies.”
The U.S. vacation rental marketplace is valued at more than $24 billion, according to a first-of-its-kind research study, PhoCusWright’s Vacation Rental Marketplace: Poised for Change and research conducted on behalf of HomeAway by Illuminas, an international research consultancy, estimates the combined UK, Germany and France marketplace at the same size.
“The success of HomeAway and the growth of the vacation rental industry are being driven by travelers who seek affordable accommodations, and by owners who have learned that they can earn significant income from their vacation home investments,” says Sharples. “However, there are nearly 14 million vacation home owners in the U.S. and Europe, and most are still not aware of how easy and profitable it can be to rent their homes, even if for just a few weeks each year. We plan to increase our marketing substantially over the next couple of years to further the awareness of the industry.”
“We look to invest in companies with market leadership positions, great management teams, and compelling growth opportunities. HomeAway is such an investment,” says Woody Marshall, TCV general partner. “We believe HomeAway will become a leading Internet brand just like TCV’s past investments in market leaders including Expedia, Netflix, eHarmony, CNET and Orbitz.”
“This financing gives HomeAway significant resources to accelerate both organic growth and growth through strategic acquisitions,” says Todd Chaffee, general partner, Institutional Venture Partners, one of the premier later stage venture capital firms.