The standard operating practice for Silicon Valley startups now is to put of IPOing as long as possible. Facebook actually got several exceptions from the SEC so that they didn't have to go public. Going public entails a ton of hassle, for example if Airbnb went public and had one of their programmers accidentally introduced a bug that misreported the number of users they had they could be liable for fraud. There's very little benefit to going public except that it creates a market for the stock which gives employees liquidity. However public markets are actually pretty crappy for that too because in order to avoid insider trading employees are often confined to a narrow window of time when they can sell their stock. Because they are lots of employees who want to convert their stock into money to but things this window gets flooded with sellers and employees wind up getting 80 cents on the dollar compared to other stock holders.

So yeah, you are missing something. Public markets are basically strictly worse than private investors. Also it's not like there are a bunch of private investors waiting to write $555M checks to company's whose financials suck... how could that make any sense?

> Because they are lots of employees who want to convert their stock into money to but things this window gets flooded with sellers and employees wind up getting 80 cents on the dollar compared to other stock holders.

I receive stock in compensation. I have elected to auto-sell it - this works even during trade window freezes.

Alternatively, they may end up getting 120 cents on the dollar, compared to other stock holders, if the stock rose in price between the time that other insiders could sell, and the time that employees could sell. If the company's on an upwards trajectory, this is quite likely.

> Also it's not like there are a bunch of private investors waiting to write $555M checks to company's whose financials suck... how could that make any sense?

https://en.wikipedia.org/wiki/Pets.com

> I receive stock in compensation. I have elected to auto-sell it - this works even during trade window freezes.

I don't think this works for employees who were already granted a huge chunk of stock pre IPO.

"Our financial don't suck, it's just that going public is really really hard and we don't want to comply with the law that's going to show that our financials suck. Wait... scratch that last line."

Welllll.... there are hassles associated with being a public company beyond merely "people holding your feet to the fire of financials." You have to comply with Sarbanes-Oxley, which is just a real pain in the ass, for example (source: I worked for NetSuite as they went public, and coming into compliance with SarbOx was a bunch of work).

A private funding round with a limited controlled equity buyback from employees gives you a certain amount of control that going public does not, too -- a company like AirBnB that had a broadly successful IPO would presumably mint a ton of millionaires among their employees, and I would expect to see a substantial talent drain once that happened.

But yes, I assume that "financials aren't in great shape" is the majority explanation for AirBnB's failure to go public.

Even accepting all of those things, if the company was profitable and had anything in the war chest they wouldn't have to take more funding. They're either getting capital for war or survival which means what they have now isn't enough for either.

Or capital is cheap and it doesn't hurt to raise it while you can.

So strange how everyone seems to agree there's at least a bit of inflation of VC funding if not an outright bubble, yet no one seems to see why this might induce a company to take as much cheap cash as it can for the impending winter.

A lot of their fundraising is for partnerships. For example, their previous round was mostly large Asian investors who could help Airbnb continue to grow internationally

Not entirely. As you know, public companies fluctuate heavily on other factors than just financial news. Something like a summary judgment in New York or California that negatively impacts AirBnB's business could send it for a spiral. It is likely more responsible to stay private until they feel they have solid footing with the regulatory environment. Private investors are clearly willing to give them a huge valuation knowing these events will likely turn out to be positive, and as long as employees are able to get liquidity, might as well stay private for now.

They do seem to be spending aggressively on growth (and legal) so I suspect you are half right in that they are probably losing a lot of money.

IPO is a one-time event. You gotta wait for the best perfect timing. I don't think its financial suck. It might not be the best shape at this moment.

Dilution is a function of valuation and amount raised. Assuming they'd raise the same amount from public or private markets, valuation is the only factor in question.

It is not a given that public markets would price Airbnb higher than private markets. In fact, recent history suggests that the opposite often happens.

So no, IPOing is not necessarily less dilutive. Also, since their valuation is $20B+, dilution differences are a rounding error.

Dilution would be about the same and it's only low-mid single digits which no one is worrying about.

The financial are important (and by most/all accounts, AirBnB's are impressive) but there are a number of other implications of IPOing, mainly around severe restrictions of how the business is run.