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Treebo Hotels Raises $16.7 Mn Series B Funding

Treebo Hotels Raises $16.7 Mn Series B Funding

Bangalore-based Treebo Hotels has raised about $16.7 Mn (INR 112 Cr) Series B funding led by Bertelsmann India Investments (BII), the strategic investment vehicle of the international media company, Bertelsmann. This round also saw participation of existing investors, SAIF Partners and Matrix Partners India.

Rahul Chaudhary, co-founder, Treebo, said, “Bertelsmann is a highly respected name in the venture capital world. They are known for taking a long term view of their investments, and for supporting companies that are building sustainable, value-creating businesses. Further, their vast experience in Media will prove invaluable in helping build the Treebo brand.”

About Treebo

Treebo was founded in 2015 by Sidharth GuptaRahul Chaudhary, and former VP Engineering of MyGola, Kadam Jeet Jain.

Treebo currently has 125 hotels in 25 cities across the country in its network. The company plans to use the fresh round of funds for furthering its expansion, strengthening its marketing outreach, and reinforcing its technology leadership in the sector.

Treebo offers quality accommodation to travelers in the INR 1,000- INR 3,000 price range. Its properties come with all essential amenities. On the hotel side, Treebo helps its partner properties drive high occupancy by improving their service standards, and by bringing them under the Treebo brand.

Milestones

Recently, Treebo launched an app, called Bumblebee, to help hotels manage their day-to-day operations. The app, a tablet-based property management system, was a big shift away from the conventional desktop-based systems which are time consuming and limited in their functionality.

Earlier this year, Treebo launched a crowd-sourced audit program called ‘Friends of Treebo’ wherein registered members of this community stay at Treebo properties as its unannounced representatives, and give feedback to the company on their experience to enable quick corrective actions where required.

Prior to this in June 2015, Matrix Partners India and SAIF Partners co-led a $6 Mn round in Treebo Hotels, a tech-enabled chain of hotels offering quality accommodation to travellers at affordable prices.

The latest infusion of funds takes the total capital raised by the company till date to $22.3 Mn (INR 150 Cr). Investec India was the exclusive financial adviser for the company for this fundraise.

The Road Ahead

Treebo now plans to expand its footprint to more than 60 cities, and quadruple its current inventory from 3,000+ to 12,000+ keys across 450 properties, over the next 12 months. These cities will include a mix of business and leisure destinations. The company also plans to launch new brand extensions along the way, including a mid-scale brand and a leisure brand, while maintaining its core proposition of value-for-money across all these brands.

The Industry

The tourism and hospitality sector is among the top 15 sectors in India to attract the highest Foreign Direct Investment (FDI). According to the data released by Department of Industrial Policy and Promotion (DIPP), the hotel and tourism sector attracted around $8.5 Bn of FDI between April 2000 and September 2015.

As per a report by World Economic Forum (WEF), India was ranked 12th in the Asia Pacific, and 55th overall in the list of the world’s attractive destinations. It was estimated that the Indian Hotel Industry will reach INR 230 Bn, growing at a robust CAGR of over 12.2%, by 2015. Further, a total investment of INR 448 Bn is expected in the next five years.

Competition

Earlier this year in January 2016, Budget accommodation startup, RedDoorz, raised an undisclosed amount of pre-series A round of funding from 500Startups.

In April 2016, Branded budget-hotel marketplace OYO Rooms raised $100 Mn in its fifth round of funding from existing investors. As per the report, OYO Rooms raised the funding from existing investors, including Japan’s Softbank, Sequoia Capital, Lightspeed Venture Partners, Greenoaks Capital, DSG Consumer Partners and Venture Nursery.

In June Budget accommodation startup, FabHotels, raised $8 Mn (approx INR 54 Cr) in a Series A round of funding from Accel Partners and RB Investments. Mohandas Pai’s Aarin Capital and Qualcomm Ventures also participated in the funding round.

Other startups operating in this space include Wudstay, GoStays, etc.

The Investors

Bertelsmann India Investments (BII) focuses on series B and C stage investments in pioneering companies in the digital, education, media and services sectors. Since its official launch in 2012, BII has invested in 10+ companies including Saavn (music streaming service), Pepperfry (online furniture marketplace), iNurture (higher education services) and most recently Lendingkart (digital lending platform for SMEs).

SAIF Partners is a venture capital firm with over $4 Bn under management. It provides seed, early, and growth stage capital for emerging companies in India and China. SAIF began partnering with entrepreneurs in India in 2002 and has backed over 40 companies since then including market leaders like MakeMyTrip (NASDAQ listed, online travel), JustDial (NSE listed, online classifieds), PayTM (e-commerce and payments), BookMyShow (events ticketing), and Urban Ladder (home decor e-commerce), PropTiger (online real estate) among others.

Matrix Partners India is an investment firm with INR 4,500 Cr under management. The firm invests in companies targeting the Indian consumer market at the seed, early and early growth stages. The firm has invested in several market leading companies in the consumer technology space including Ola (local transportation), Quikr (online classifieds), Practo (doctor search engine), Stayzilla (short-term accommodations marketplace), Dailyhunt (mobile local language platform), LimeRoad (mobile social commerce marketplace), Housejoy (local services marketplace) and Mswipe (mobile POS) among others. Matrix Partners has a global network of funds investing in the US, China and India with US$ 4B under management.

Author

Aparna Mishra

Inc42 Staff

After a 2-year-stint at Ernst & Young, Aparna moved to Journalism. Her prior experience enables her to understand business management. An avid reader and a traveller she hopes to gain insights on the startup ecosystem at Inc42.

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