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Business News/ Companies / News/  Treebo Hotels in talks with VC funds to raise $25 million
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Treebo Hotels in talks with VC funds to raise $25 million

Treebo Hotels plans to use the funds for expansion of its hotel network and to pay for marketing

A file photo of a hotel in Gurgaon that has a tie-up with Treebo Hotels. In June 2015, Treebo raised $6 million from SAIF Partners and Matrix Partners India.Premium
A file photo of a hotel in Gurgaon that has a tie-up with Treebo Hotels. In June 2015, Treebo raised $6 million from SAIF Partners and Matrix Partners India.

Mumbai: Treebo Hotels, a budget hotel room-booking platform, has begun talks with venture capital funds to raise around $25 million (around Rs170 crore), two people aware of the development said.

Treebo raised $17 million in July in a round led by Bertelsmann India Investments (BII), the strategic investment arm of German media conglomerate Bertelsmann SE and Co. KGaA.

Existing investors Matrix Partners India and SAIF Partners also participated in the funding round.

In June 2015, Treebo raised $6 million from SAIF Partners and Matrix Partners India.

“They are back in the market to raise funds. They had initially planned to raise around $40 million in one go and had started conversations in early 2016," one of the two persons cited above said on condition of anonymity because the talks are private.

“However, given the damp fund-raising environment last year, they had decided to raise around half of that amount and again hit the market at a later date."

Treebo will use the funds for expansion of its hotel network and to pay for marketing, said the second person cited above, also requesting anonymity.

Existing investors are likely to participate in this round too, the person added.

“We do not comment on speculation or market rumours," a spokesperson for Bertelsmann said in an email response.

Emails sent to Sidharth Gupta, co-founder of Treebo; Matrix Partners and SAIF Partners did not elicit any response.

Announcing its previous fund-raising in July, Treebo said that it plans to expand its presence to more than 60 cities, and take its inventory from 3,000 rooms to more than 12,000 across 450 properties over the next 12 months.

These cities will include a mix of business and leisure destinations, it said.

The company also plans to launch new brand extensions, including a mid-scale brand and a leisure brand.

In an interview with Press Trust of India in November, Gupta claimed that Treebo had 200 properties in 40 cities with more than 5,200 rooms.

Treebo was founded in March 2015 by Indian Institute of Technology-Roorkee alumni Rahul Chaudhary, Sidharth Gupta and Kadam Jeet Jain.

Chaudhary and Gupta previously worked with online fashion retailer Myntra. Jain worked with travel portal MakeMyTrip.

Treebo is not the only hospitality start-up that’s trying to build a tech-enabled budget hotel chain in India.

Last month, Mint reported that FabHotels, a hospitality start-up founded by former Rocket Internet executives, has raised $8 million 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.

FabHotels currently has about 65 hotels in its portfolio, spread across 15 cities, which translates to around 1,500 rooms. The budget hotel brand is looking to reach 100 hotels or about 2,500 rooms by September, Mint reported.

Treebo and FabHotels are following the examples of Chinese budget hotel chains China Lodging and Homeinns, which have built multi-billion dollar budget hotel brands in Asia’s largest economy.

Indian budget hotel aggregators also raised funds last year.

Oyo (Oravel Stays Pvt. Ltd) raised Rs413 crore (around $62 million) from Japan’s SoftBank Group Corp.

Stayzilla, an online aggregator of budget hotels and homestays, raised $13 million in a Series C round of funding from existing investors Matrix Partners and Nexus Ventures, Mint reported in May.

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ABOUT THE AUTHOR
Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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Published: 04 Jan 2017, 12:32 AM IST
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