Airbnb led Atlas Obscura’s recently-announced Series B round, which netted the media and events company $20 million in fresh financing, and a new distribution partner for its curated experiences and guided group trips.
Travel On The Obscure Side
Despite itself, the world is a weird and wonderful place, full of nooks, crannies, hideaways, and local secrets just waiting to be explored. For those with the cash and professional flexibility to travel frequently and experience all that’s on offer, congratulations. For the rest of us, exploring the world from a big comfortable couch (or stolen moments at one’s desk at work) suffices.
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Reading travel sites is not just about a little escapist, vicarious living. It’s also how a lot of folks (your correspondent included) discover the experiences to fill the fantastical trips on an ever-growing bucket list.
Take where I live as an example. Though hardly a “fantastical” destination, Chicago is a lovely city that’s best experienced any time that isn’t the dead of winter, unless you’re into pain.
Where are you going to go after you’ve taken your selfie at Cloud Gate (aka “the bean”), ridden on the Ferris Wheel at Navy Pier, and eaten a Chicago-style hot dog replete with nuclear-green pickle relish and sport peppers? You could check out the International Museum of Surgical Science or the Busy Beaver Button Company, or take a spin down the 606 trail, or see the trading room of the old Chicago Stock Exchange, or take yourself and your smoked fish aficionado friends down to Calumet Fisheries. There are lots of options off the beaten path, and at least one company has quite literally made a name for itself by mapping the more obscure places to visit in places around the world.
Atlas Obscura is not your parent’s travel guide. Founded in 2009, what started as a project by writer Josh Foer and documentarian Dylan Thuras to document, catalog, and map the lesser-traveled and obscure parts of the world has evolved into a full-fledged media and events company. Now led by former Slate journalist and editor David Plotz, the company’s offerings include its main travel and experience blog, a food-focused publication called Gastro Obscura, a series of “local experiences,” and guided group trips around the world.
Given the latter-mentioned aspects of Atlas Obscura business, it might not be a surprise that a travel company like Airbnb is interested in a partnership. The home rental and accommodations booking giant—which also features a curated collection of experiences and recently launched a print and digital magazine of its own—led Atlas Obscura’s $20 million Series B round. Although the round was announced this week, SEC filings indicate that the majority of the capital was closed back in June.
Other investors in the round include television conglomerate A+E Networks (which owns A&E, The History Channel, and Lifetime, among other properties) and New Atlantic Ventures, according to a statement provided to Crunchbase News. An SEC filing shows that New Atlantic Ventures invested $450,000 into the Series B deal through a special purpose vehicle.
Atlas Obscura’s Series B transaction brings the company’s total capital raised to $32 million, according to Crunchbase data. The company says it now has 7 million monthly unique visitors, a network of 630,000 contributors, and has sold over one million copies of its books.
As part of the terms of the transaction, Airbnb will cross-list Atlas Obscrua’s local experiences and guided trips to its own site. In its statement, Atlas Obscura says its trips are kept intentionally small, typically topping out at a dozen travelers, and are typically priced at $1,300 to $5,000, depending on the trip’s destination and duration. Its local experiences are “usually limited to 10 guests or fewer, and typically cost $20-$60 per person.”
Airbnb And Corporate (Ad)venturing
Like many of the billion-dollar private companies barreling toward IPOs (or recently out the gate), Airbnb has made a number of investments into startups which align with its long-term strategy. It’s a case of the venture-backed becoming the venture backer.
Atlas Obscura’s might be the most recent investment deal struck by Airbnb, but it’s not the largest.
Airbnb’s investments seem to be part of a consistent strategy aimed at increasing inventory supply in its own network, and diversifying into other markets. And, here, “other markets” is used both in the sense of markets outside Airbnb’s U.S. stronghold, but also into other types of service offerings.
As the company faces regulatory pressure from municipalities—citing rising housing prices for locals as aspiring nano-hoteliers buy up inventory to turn around as short-term vacation rentals—and landlords miffed about tenant rate arbitraging, Airbnb is expanding its revenue streams beyond the prototypical back bedroom and short-term apartment rentals. Its corporate venturing is a manifestation of that strategy.
Take Airbnb’s leadership in Lyric’s massive $160 million Series B round from this past April as an example. The San Francisco-based company works directly with landlords and owners of multi-unit buildings to convert apartment spaces into what it calls “creative suites,” nominally catering to business travelers.
According to extensive analysis of the deal on travel news site Skift, listing exclusivity was likely discussed but not settled on in the final deal terms. Though Lyric will continue to list its short-term rental inventory on a number of platforms, Lyric co-founder and president Joe Fraiman told Skift that “[g]oing forward, we’ll have more to share here. Some things might be exclusive, some may not, but Airbnb has always wanted Lyric to grow as an independent company.”
Elsewhere in the interview, Fraiman indicated that he and his co-founder, Andrew Kitchell, have known Airbnb’s founders for years. “We spent a lot of time with [the Airbnb] team developing and sharing our vision for where we thought the ecosystem was going, and to identify what would ultimately matter most to guests and how to do it in a regulatory compliant fashion,” Fraiman told Skift.
In regards to the OYO deal it bears mentioning that Airbnb led but a small portion of a much larger Series E round raised by the low-cost Indian hotel and travel operator. Airbnb took a $75 million stake in the venture as part of OYO’s $1.275 billion SoftBank-led Series E, which unspooled over the course of several separate tranches. Although it’s a relatively small chunk of OYO, valued at around $5 billion, post-money, its equity stake acts as a foothold in India, which alongside China is one of the company’s fastest-growing markets, according to a report by Airbnb from February.
Casual users of Airbnb’s services might not realize that the company has expanded beyond just accommodations and activities like cooking classes or walking tours. It genuinely seems like they want to be an end-to-end travel experience booking platform. And restaurants are, if you’ll forgive the pun, part of the local flavor. Leading restaurant table-booking service Resy’s $43 million Series A round in January 2017 bought Airbnb the ability to list restaurants and facilitate booking on its site, facilitated through Resy.
Airbnb’s corporate investments in startups mirror aspects of its acquisition strategy. The company acquired last-minute booking service HotelTonight for a reported $400 million and more than twenty other startups, according to Crunchbase data. As Airbnb encroaches on more legacy travel booking services, it’s trying to create network effects in other verticals outside its core short-term, largely peer-to-peer rental marketplace. And when it comes to aggregating additional services and inventory through partnerships, money talks. It’ll be interesting to see which other areas Airbnb invests in before (and after) its IPO.
There’s general consensus that Airbnb will go public within the next twelve to fifteen months.
Illustration: Li-Anne Dias