The key to Luxury Retreats’ exit to Airbnb was optionality

Luxury Retreats

Earlier this week, Airbnb finalized its rumoured acquisition of Montreal-based vacation rental startup, Luxury Retreats. iNovia managing partner Chris Arsenault, an early investor in Luxury Retreats, has penned the below op-ed to provide a unique perspective on how such deals go down. Enjoy!


Entrepreneurs and limited partners often ask that same simple question: “What does it take to get to a successful exit?”

The answer is simple: optionality.

Optionality for iNovia

We have the complex opportunity of identifying early-stage tech entrepreneurs with whom we feel confident enough to partner with over the long-run. The opportunity of “selecting” entrepreneurs to fund comes with the challenge of identifying those with whom we have affinity, chemistry, alignment of interests, as well as similar values. We meet a lot of entrepreneurs, but the size of each fund and the time commitment required to back the great ones command us to partner with a limited number of entrepreneurs, and thus a finite number of companies per fund. Another challenge is that we need to be “selected” by the entrepreneur as well!

It’s difficult for a CEO to get into the mindset of early relationship building that can bring offers to the table.

Usually, our nascent partnership with a founder is followed by years of efforts in supporting their company’s growth and vision. As a VC supporting its entrepreneurs in building category-leading companies, we provide sound boarding and focus on three core elements: attracting talent, helping build corporate relationships, and attracting growth capital.

The exit stage is more complex and a whole new set of dimensions come into play. We believe “exit” isn’t the best term as entrepreneurs shouldn’t have to “sell” their companies, but rather get acquired, or have the opportunity to IPO in order to enable their next chapter.

But let’s face it, it’s difficult for a CEO to get into the mindset of early relationship building that can bring offers to the table. Building towards optionality is time-consuming because it requires resources and can distract from the daily operations. However, a CEO having the option “to say no” to an unsolicited offer is pretty powerful.

Optionality for Luxury Retreats

We had the opportunity to meet and build a relationship with Joe Poulin, founder and CEO at Luxury Retreats, starting back in late 2010. Joe hadn’t raised any venture capital at that time and he had the option of choosing investors to fund his vision. Our relationship building resulted in an investment in early 2012. With sufficient capital on hand, Joe started pulling together a high-quality board of directors: Peter Kern (Expedia board member and media expert), Hugh Crean (CEO of Farecast acquired by Microsoft) and Bertrand Cesvet (CEO and senior partner at Sid Lee and branding guru). I (iNovia co-founder and entrepreneur) also had the pleasure of joining as a member of the board. The composition of the Board was in line with the vision that Joe has set early-on, as well as the expected growth challenges ahead.

Optionality proved to be one of Luxury Retreats’ biggest strengths when Airbnb knocked at the door to investigate a deeper relationship.

Then came actions to solidify the team in order to build for growth. Over the following few years, iNovia actively worked alongside Joe and the board in helping attract a stellar executive team with deep sector expertise (including executives from vente-privée, LesConcierges, Air Canada and Aldo). It wasn’t easy by any means, it took a few rounds before attracting the right team members, but we eventually got there.

Luxury Retreats was solicited a number of times over the years to be acquired, and this led to some deeper thinking. It forced management to review the growth path the company was on and take decisions pertaining to how it would move to the next level. This ended up accelerating Luxury Retreats’ second financing round, led again by iNovia, in 2015. This time, we invited three of our limited partners (iNovia investors) into the round to invest alongside the fund and this led to the financing closing internally.

During this whole time, Joe never strayed from his original vision of owning and developing the most exquisite luxury travel experience for his guests. His ability to attract top talent, develop technology-enabled experiences for relationship and concierge management, and build strong strategic relationships proved extremely valuable. Building strategic partnerships was second-nature for Joe. Luxury Retreats partnered early on with HomeAway, VRBO, and Airbnb for reach and distribution.

As CEO and co-founder of a profitable company, Joe evaluated every acquisition opportunity and financing offer like it was the last. While building something the market valued and, ultimately, Airbnb valued, he entertained relationships and made sure the competition and deep pocket acquirers knew about Luxury Retreats’ performance and results. He also made sure investors and key industry players knew the company was empowered by its team’s execution abilities, that they had exit opportunities, as well as financing options. These relationships are developed over long periods of time and generally entail a working relationship first. This allows each side to get to know each other better and, more importantly, discover the strategic value you can bring to a potential acquirer. It takes unique skills to build viable options prior to engaging the company into pursuing any of them. Sometimes, founders tend to focus on a narrow set of options, but Joe mastered them all.

Optionality proved to be one of Luxury’s biggest strengths when Airbnb knocked at the door to investigate how much deeper the initial commercial relationship could go. Joe’s vision for luxury tourism services was crystal clear and I’m sure Brian at Airbnb fell in love with it, along with the quality of the management team, and the high growth potential of combining both companies. The alignment of interest and key assumptions reminded me how we (iNovia) also feel when we decide to back an entrepreneur.

To get acquired doesn’t mean that you first had to be put up for sale. But as a CEO, it does mean having the opportunity to review and decline unsolicited offer. And being in a situation of optionality requires an investment in time and effort towards building key relationships along the way. We are really proud to have worked tirelessly together with Joe Poulin, Gian Carlo Di Tommaso, Julien Zakoian, Nick Guezen, Amr Younes and the rest of the board to make this happen. Over a little more than five years, we’ve seen a highly promising company evolve into a highly successful one that decided to further its growth by joining Airbnb, another amazing company.

With the Luxury Retreats transaction, Airbnb will gain access to over 4,000 of the best properties in the world, unique technology and the knowledge of 260 key employees with deep luxury travel and concierge expertise, the vision and clear understanding of an executive team that can grow this segment like none other in the industry.

Impact for Montreal and future growth

Luxury Retreats is the second transaction iNovia has been involved with alongside Airbnb — the first one being the sale of Localmind, another iNovia portfolio company back in 2012. Localmind was a much smaller company also founded, funded, and launched in Montreal that benefited early on from a strategic relationship with its acquirer. The difference between the two, is that the Luxury Retreats’ technology talent footprint and deep industry expertise should cumulate to even further growth in both headcount and ecosystem relationships in Quebec and Canada over the coming years.

As a Montrealer, I’m extremely proud to see Airbnb now having such a substantial footprint in our backyard. Great ecosystems develop when these kinds of transactions happen, and we’re excited that Montreal has once again raised the bar. Joe Poulin and Gian Carlo’s active angel investing and local implication will only further fuel our already growing tech community. I think that this acquisition could have a multiplier effect on the Montreal tech ecosystem, and we anticipate startups will reap the rewards of having an anchor tenant join the Montreal community for decades to come.

In summary, a company should never have to be up for sale. GREAT COMPANIES ARE ACQUIRED, NOT SOLD. Forging strategic relationships and having options at every step of the way helps build great value. But none of that comes without a clear vision and execution.

Chris Arsenault

Chris Arsenault

Enthusiastic Entrepreneur. Managing Partner @iNovia VC. A loving dad. Passionate about our ever-changing tech world.

  • Alain Denis

    Optionality also works for funds of funds, when it comes to selecting the best fund managers. iNovia is certainly part of that select group of professional, creative and dedicated team of managers whom we trust. We continue to support and promote that breed of people of want to build a strong and powerful VC ecosystem in Quebec and across Canada. Congrats again to iNovia for your many successes! Alain Denis FSTQ

  • An entrepreneur, or a VC, can’t time the market in terms of exiting — if they say they can then that’s bullshit. But both, in mutual accord, can help build a real business and develop “optionality” along the way in order to be ready to act when the market is “yelling exit opportunity”!