It’s an achievement to Airbnb to acquire Montreal’s Luxury Retreats
Have you ever noticed most of the entrepreneurs and limited partners often ask the same question: what should they do to get the successful exit? The answer is quite simple, it’s optionality.
Is optionality time-consuming?
There will be the complex opportunity of identifying the early-stage tech entrepreneurs, with them we feel confident enough to partner with over the long-run so that both the partnering companies will have the good name and they can expand their business as they desire. The opportunity of selecting the entrepreneurs comes with the challenge of identifying the entrepreneurs with whom we have chemistry, affinity, similar values, and the alignment of interest. Nowadays, there are many emerging entrepreneurs, but the size of each fund and the time commitment will make the companies to partner with a limited number of entrepreneurs and thus there will be a finite number of entrepreneurs per fund. Another complexity is that we need to be selected by the entrepreneur as well.
Not your usual acquisition deal
Usually, the nascent partnership with the founder will happen after the years of efforts in supporting and enhancing the company’s growth and vision. The VC supporting their entrepreneurs in developing the category-leading companies, sound boarding and focus on the three core elements is mandatory they are attracting talent, attracting capital growth, and helping build corporate relationships.
The exit stage is the most challenging one, in which the whole set of dimensions, comes into play. Some believe that exit is not the best term as an entrepreneur should not have to sell his/ her company, but rather you should up the possibility to get acquired or should have the opportunity to IPO to enable their next chapter.
We understand that it will be difficult for the CEO to get into the mindset of early relationship building that may bring new offers. Building towards the optionality is the time-consuming one because it needs the support of the resources and can divert from the daily operations, but the CEO has the option to say no to the unrequested offer that is quite powerful.
Optionality for luxury retreats
The CEO of luxury retreats, Joe Poulin said that they didn’t raise any venture capital in 2010; at that time they have an option of choosing the investors to fund their vision. Now, Airbnb has acquired Luxury Retreats after many successful attempts. Managing partner of iNovia, Chris Arsenault, was an early investor of Luxury Retreats said that their relationship building with Luxury Retreats has resulted in an investment in the first quarter of 2012. With enough capital on hand, Joe started to pull the high-quality board of directors Hugh Crean, Peter Kern, and Bertrand Cesvet. Chris also has the opportunity to join as a member of the board.
The board was in line with the vision that Joe has already set on and he expected the growth challenges ahead.
Planning the timing
Subsequently, the actions were implemented to solidify the team in order to enhance the growth. Over the few years, iNovia actively concentrated on the work. Joe and the board were helping to attract a stellar executive team with the deep sector expertise. It was really difficult, it took few rounds to attract the right team members, but they eventually found there.
Luxury Retreats were requested a number of times over the years to be acquired and this made them think ever better. It forced the management to check their growth path, which the company has followed over the years. And take decisions concern to how it will step into the next level. This resulted in accelerating the Luxury Retreats. The second financing round was led by iNovia in 2015. This time the company invented three of their limited partners into the round to invest in the fund and it resulted in financial closing internally.
During this whole journey, Joe never moved aimlessly from his original vision of developing and owning the most elegant luxury travel experience for all his guests. He has the ability to attract the top talent, develop technology-based experiences, and concierge management. And he has the ability to build the strong strategic relationships that proved very valuable. According to Joe, building the strategic partnerships was the second nature. Earlier, Luxury Retreats has partnered with HomeAway, VRBO, and Airbnb for their reach and distribution.
Closing the big deal
Joe, the CEO, and co-founder of the profitable company has evaluated every acquisition opportunity and the financing offer as if it was the last. He encourages the relationships and he will make sure the competition and deep pocket acquirers should know about Luxury Retreats, its entire performance, and results. He also makes sure the investors and the key industry players should know about the company and he ensures that the key industry players knew about the company and they are inspired by the team’s execution activities and should know that the company had the exit opportunities and also the financial options. All these relationships were developed over long periods of time and basically, they require a working relationship first. This allows both the sides to understand each other better and better and above all, it discovers the strategic value, which you can bring to a potential acquirer. It considers the unique skills to build the feasible options prior to engaging the company into following any of them. Sometimes, the founders may focus on the narrow set of options, but Joe followed them all.
Making hard business decisions
Optionality was one of the Luxury’s biggest strengths and when Airbnb approached Luxury Retreats to investigate how much deeper the initial commercial relationship can extend. Joe’s vision for the Luxury tourism services was very much clear and for sure the Co-founder of Airbnb, Brian would have fallen in love with it. Along with the powerful management team, and the high growth potential of combining both the partnering companies. The coincidence of interests and the key assumptions would have made Airbnb acquire Luxury Retreats.
To get acquired by another company doesn’t mean that you should have to put up for sale, but as a CEO it means that having an opportunity to review and decline the uninvited order. And if the company is in the situation of optionality requires the investment in the correct time and it also requires the proper effort towards building the key relationship along the same way. iNovia is proud to work with the highly promising company, Luxury Retreats.
With the support of the Luxury Retreats acquisition, Airbnb will gain more than 4,000 best properties in the world. It has the unique technology and the knowledge of 260 main employees with the immense luxury travel and concierge expertise, the vision and clear understanding of the executive team will help to grow this segment like none in the industry have done.
Luxury Retreats, the second transaction iNovia has been involved next to Airbnb. It is an added advantage for the Airbnb to have such a substantial footprint in their history. Great ecosystems happen when this kind of healthy and wise transaction happen. And it is time for the Montreal to raise the bar again. This acquisition will be one of the footpaths in the history of both Luxury Retreats and Airbnb. And it will also help the tech community to grow further. And this acquisition may have the multiplier effect on the Montreal tech ecosystem.