On Thursday, the short-term rental startup Sonder announced the completion of a $210 million round of series D funding. This totals the company’s funding at more than $400 million and puts the company’s valuation at more than $1 billion. The round brings in new investors like Fidelity, Tao Capital Partners, Gavin Baker’s Atreides Capital, Valor Equity Partners, WestCap, and ARod Corp to the fold with existing investors Greenoaks Capital and Spark Capital. This, of course, puts the hospitality company in definite unicorn territory.
If you have not heard of Sonder, this is a San Francisco-based hospitality firm (formerly known as Flatbook) that offers hotel-style accommodations (including beds, sheets, blankets, towels, and other toiletries) in personal living spaces, complete with round-the-clock concierge service It is the brain child of cofounders Francis Davidson and Lucas Pellas, while at McGill University. They developed the project with former Oatbox digital marketing director Olivier Gareau, in 2012.
Sonders attests that their units are typically purchased with developers who then sign leases ranging from studios to six-bedroom suites. In order to be considered as a lease holder, though, the developer must meet a rigorous list of 200+ quality standards. More important than that, though, developers must also comply with local rental laws and regulations.
This might all sound a bit familiar, but it is not the same thing as Airbnb. They offer such apartment-style hotel accommodations in 28 cities, globally. These units can be rented by travelers at a daily rate, though some cities (like Chicago and New York) require a minimum stay of 30 days. The key to this model is Sonder’s use of technology to cut down on traditional hotel costs (like full-time on property concierge staff).
In a statement, Sonder co-founder and chief executive officer Francis Davidson said, “The future of hospitality will be dynamic. It will demand flexibility. And that’s what our diverse, unique, and adventure-seeking world is like too. That’s why, while our spaces will continue to take on new forms and expand to exciting neighborhoods around the world, a Sonder will always be unforgettable.”