Even as the sinking economy is making many people think about turning their vacations into "staycations," an online vacation rental service recently managed to raise $250 million to fund its growth.
The listing service, HomeAway Inc., said Tuesday that with its latest round of private financing, it had raised $405 million since it launched in 2005.
The Austin, Texas, company tapped venture capital firms Technology Crossover Ventures, Institutional Venture Partners and Redpoint Ventures for the latest round.
HomeAway did not disclose what stake these investors now hold in the company but said the infusion represented a minority investment.
HomeAway's founder, Brian Sharples, said that given the state of the economy, he was nervous about clinching the most recent round of funding. But investors got to see that HomeAway was still performing well "in a pretty bad quarter of economic news," he said.
The company's revenue comes from people who typically pay $299 a year to list a vacation property for rent. Sharples said HomeAway's sites, which include VacationRentals.com and GreatRentals.com, would end the year with about 325,000 paid listings, up from 257,000 last year.
Sharples said the company's growth was initially propelled by a boom in building, construction and home buying. Now, HomeAway is benefiting as owners of vacation homes seek an extra source of income by renting out their places during the economic downturn.
And consumers are more interested because it can be cheaper for a family, for example, to rent a house for a week than hotel rooms in many popular destinations.
"We've always had a hunch that more people would start renting if times got tough," he said.
Sharples said the company used $88 million of the latest financing to finish paying off debt, and it would use some funds to increase marketing. HomeAway will also buy back shares, which is a way to reward workers with vested stock options at a time that doesn't seem ripe for taking the company public, Sharples said.
In addition, HomeAway might use the venture capital to pick up new Web properties in overseas markets. The company's vacation-rental listing stable includes sites that serve Britain, Germany and France, but it has no presence in places such as Australia, Asia or the Middle East.