On Thursday, the hospitality startup Sonder announced that it secured $225 million in new investments. The Airbnb rival received its latest cash injection from a host of notable venture capital firms including Valor Equity (Tesla), Tao Capital Partners (Uber), and Westcap (Ramada). Furthermore, with its latest funding round complete, the firm has achieved unicorn status and is now valued at $1 billion.
Given this disruptive approach toward its industry, Sonder seems primed to reward the faith of its high-profile investors.
Disrupting the Disruptors
Just as Airbnb shook up the established hospitality industry, Sonder seeks to revolutionize the online temporary lodgings sector. The firm offers consumers a service that combines the reassurance and convenience of a homestay with the amenities and reliability of a multinational hotel.
As with most travel apps, Sonder allows consumers to reserve a space in a host of appealing locales. However, as opposed to an online house and apartment rental service, the firm is not an intermediary. When visitors make a reservation, they’re arranging to stay in one of the company’s properties. As such, travelers don’t have to worry about connecting with a potential flaky host or being forced to stay in a disheveled nightmare.
Instead, Sonder guests check into immaculate and luxurious spaces across North America and Europe. When they arrive, visitors step into multi-person residences that are both highly functional and incredibly stylish. Furthermore, customers can stay in their well-appointed lodgings for as little as one night or as long as two years.
Humble Origins, Grand Ambitions
Like many great companies, Sonder’s origins are quite humble. CEO Francis Davidson co-founded the company in 2012 when he was still attending McGill University. However, it wasn’t until 2014 that the executive came up with Sonder’s game-changing core product.
While visiting San Francisco, Davidson found himself tricked into staying at a filthy online temporary rental. He fled to a hotel that was clean, vacuous, and disconnected from the vibrant parts of the city. Subsequently, he had the idea to offer temporary lodgings that enable visitors to feel like they live in the places they’re visiting.
In the five years since Davidson’s awful trip experience, Sonder now operates 8,500 spaces in 20 cities on two continents. Last year, the firm raised $135 million in Series C funding and generated $100 million in revenue. But by the end of 2019, the hospitality startup forecasts profits of $400 million.
In a blog post announcing his firm’s billion-dollar valuation, Davidson laid out a roadmap indicating his intention to displace Marriott and make Sonder an Apple/Disney/Nike scale brand. Given the startup’s amazing hypergrowth, the CEO’s ambitions don’t seem far-fetched.