Sonder, a short-term rental startup has just ended a funding round with $210 million bringing its current valuation over $1 billion.
The hospitality company, which offers apartment-style hotel stays in 28 cities worldwide, has experienced explosive growth since its launch in 2012. The Series D funding round, led by Valor Equity Partners, WestCapand Tao Capital Partners, brings the company to a total of $400 million in funding.
Sonder master leases residential properties and rents them out at daily rates to travelers, offering a consistent experience across markets. Key to their model is the use of technology to eliminate costs that traditional hotels incur, such as full-time concierge staff on the property, said Francis Davison, the company’s Founder and CEO.
It’s part of a crop of companies, including Stay Alfred and the Airbnb-backed Lyric, carving out a space between vacation rental platforms like Airbnb and traditional hotels. “It’s crazy that hospitality hasn’t changed in 50 years,” said Davidson. “It’s not about operating funky places but actually managing accommodations.”
Sonder has passed the competition in terms of volume, with 8,500 units across 28 markets. “We’ve added one building every day for the last quarter,” said Davison. “That represented 3,000 units in the last three months. Most of our competitors, about a dozen, have added a few hundred units at most.” Sonder is on track to earn $400 million in revenue by the end of the year, and their occupancy rate is in the mid-eighties, per Davidson.
The $210 million, combined with $15 million from real estate partners, will fuel the company’s growth into a global brand, said Davidson. Sonder has plans to expand throughout Europe and into the Middle East and Latin America.
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