HomeAway Raises $250 Million

HomeAway, a vacation rental marketplace, just raised $250 million in their latest round of financing. HomeAway previously raised $209 million which was used to acquire eleven vacation rental sites including VRBO, VacationRentals, CyberRentals, A1Vacations, GreatRentals, Holiday-Rentals.co.uk, OwnersDirect.co.uk, FeWo-direkt.de and Abritel.fr.

With $150 million in yearly revenues the funding will likely be used for additional acquisitions in the vacation rental front – a $24 billion industry. This bodes well for Boston based FlipKey which offers verified vacation rental reviews.

With this round HomeAway was valued at $1.15 Billion – using the basic Bizak revenue valuation you get approximately $600 Million. According to Michael Arrington of Techcrunch this was an “absurd valuation” that won’t likely produce positive returns for the investors.  He says:

It’s also clear that the round was seriously overvalued. Ebay was rumored to have mulled over an acquisition earlier this year at $1.5 billion, but it never came through with a firm offer. It’s not clear who else could be a buyer at this valuation. Also, since HomeAway has acquired just about everyone in the market, there’s little room for additional growth via acquisitions. 20x ebitda is a public company valuation for a company with real growth potential. Our guess is these new investors may take a bath. Source:  Techcrunch

Only time will tell if the deal is bound for failure but either way there will be some very happy entrepreneurs who are more than willing to take a piece of that $250 million.