We had a shocker last week: India’s largest homestay startup Stayzilla shut down after a seven-year run. This was a company that had 8,000 stay options in close to 1,000 locations in India and had raised over US$34 million from marquee investors like Matrix Partners and Nexus Venture Partners in India. Yet, wafer-thin margins, high costs of acquisition, and an immature market killed it. That’s India for you.
No wonder, then, that Hostmaker – a #startup that provides management services to Airbnb hosts from check-in to the nitty-gritty details like cleaning and fresh linen – is focused on the developed markets of London, Paris, Rome, and Barcelona. The startup, founded by Indians Nakul Sharma and his wife Deepti Patankar, today announced its series A funding round of US$6.5 million. The company wants to strengthen its position in these four markets and is “carefully analyzing opportunities” in Asian cities such as Tokyo, Hong Kong, and Singapore – but not in India.
Deepak Shahdadpuri of DSG Consumer Partners, a seed-stage investor in Hostmaker, explains why to Tech in Asia.
“The company piloted its service in London and became the market leader. They then used the London base to enter markets where Airbnb was growing rapidly – hence Paris, Rome, and Barcelona. With this round of funding, the company will consolidate its base and actively look at markets they feel Airbnb and similar services are growing rapidly, and where there is latent demand for this service,” Deepak says. “India could be an interesting market over time as the market evolves.”
He believes that the Indian market will eventually take to the Airbnb model of the sharing economy like they did with Uber. “But this will take more time to develop and have its own evolution,” he says, adding that Hostmaker will be watching.
Acquisitions on the cards?
Nakul and Deepti were Airbnb hosts before they started Hostmaker. They had hectic full-time jobs and found it tough to take care of their Airbnb guests. So Nakul roped in a team of housekeepers and concierges to help give guests a better experience. That’s how the Hostmaker idea occurred to him.
Hostmaker is also considering the possibility of acquiring smaller high-quality operators in a premium homestay segment.
“The uncertainty of not knowing what you are going to get is still a hurdle for many to book a home on Airbnb. Hostmaker’s aim is to bring hotel-quality consistent standards to homes without losing the uniqueness of the homes themselves,” says Nakul. “We want the
short-letting experience for homeowners to be as easy as flicking a switch on.”
Today, the company announced that 80,000 guests have stayed in Hostmaker-managed properties since December 2014, when it launched. “Over the last few years, we have seen a fundamental change in how homeowners view their home as not just their private space but as a space to be shared, which allows them to monetize an asset and makes living in expensive European capitals more affordable. We are the only ones in our segment now that is rapidly scaling internationally and capitalizing on this opportunity for the homeowners,” Nakul notes in an announcement about the latest funding.
“We grew 400 percent in the last year,” he claims. The base figure for growth was not disclosed.
The fresh round of funding, which took the total capital raised by Hostmaker to US$9.3 million, was led by Paris-based VC fund Ventech and existing investors DN Capital. Asia-focused DSG Consumer Partners took part in this round as well. This is DSG’s third investment in the startup.
The funding will also go into boosting Hostmaker’s tech muscle, which includes a proprietary pricing algorithm that can tell you how much income your home could generate and a “dashboard that will allow hosts to review their home’s performance related to earnings, maintenance, and guest reviews across multiple platforms.”
The company announced that it is “considering the possibility of acquiring smaller high-quality operators in a premium homestay segment.”
Converted from British pounds. Rate: US$1 = GBP 0.81.