Consumers may not feel like traveling much these days. But that hasn’t stopped HomeAway, the online vacation rental marketplace, from raising an astonishing $250 million in venture capital.
The Austin, Texas-based HomeAway will use the money to continue a bold strategy of buying about every travel site in the world.
It will make strategic investments and debt repayments. Technology Crossover Ventures, Institutional Venture Partners, and Redpoint Ventures led the round, which the firms say is the largest minority investment in a U.S. Internet company in the past eight years, according to data from VentureSource.
Brian Sharples, chief executive, said the company was happy to secure the round despite the financial crisis. In doing so, it will likely be in a good position to either buy out its rivals or intimidate others from getting started. Sharples said the company plans to increase its marketing considerably.
The U.S. vacation rental marketplace is valued at more than $24 billion, according to a research study by Illuminas, an international research consultancy that did the research on behalf of HomeAway. The study estimated that the U.S. market is roughly equal to the combined United Kingdom, Germany and France markets.
The HomeAway site is free for travelers interested in renting a home, but homeowners pay $275 a year to list properties on the site, which is HomeAway’s only source of revenue. HomeAway will have just shy of $100 million in revenue this year.
HomeAway was founded in 2005 with $49 million in funding from Austin Ventures and Redpoint Ventures. That initial investment funded the acquisition of five of the world’s leading vacation rental sites, including Cyberrentals.com in the U.S. and Holiday-Rentals.co.uk in the UK. In 2006, IVP and Trident Capital led a $160 million financing round that funded the company’s purchase of VRBO.com. The acquisition meant that, along with its flagship site HomeAway.com, the company operated the two largest rent-by-owner sites in the U.S. In 2007, HomeAway acquird VacationRentals.com, Abritel.fr, and OwnersDirection.co.uk.
Full told, the company has raised $459 million and it has 11 vacation rental sites in its portfolio. It also owns EscapeHomes.com, which connects buyers and sellers of second homes and resort real estate.
The company will introduce a share repurchase program for certain shareholders, including tenured employees.