Short term rental start-up Domio is planning to shut down and sell off assets after running out of funds. Domio was not able to raise new capital to keep its operations going after emerging from a temporary Airbnb suspension due to fraud allegations. Airbnb agreed to reinstate Domio’s accounts “after its board removed all members of its leadership team present at the time of the unacceptable activity.”
According to The Information, “After failing in an effort to raise at least $10 million in capital, the company laid off the majority of its staff earlier this month and decided to pursue an alternative to bankruptcy known as an assignment for the benefit of creditors, a form of insolvency in which a third party oversees the sale of a company’s assets.” Sherwood Partners, a consulting firm that works with distressed companies, is reportedly overseeing the sale of the company assets.
Domio is among a number of venture-backed companies that went out of business operating the short term rental arbitrage model without a path to profitability. Most of the companies who have remained in business have switched to a management fee arrangement with landlords.
Domio was financially anemic despite laying off “more than half of its employees between January and August, as well as receiving a loan of between $2 million and $5 million under the Payroll Protection Program in April.”
Founded in 2016, Domio raised $100 million Series B in December 2019, split between debt and equity.
photo credit: domio