Indonesian capsule hotel startup Bobobox has bagged $11.5 million in Series A funding from new and existing investors, its co-founders told DealStreetAsia.
Bobobox offers affordable bed-sized rooms, also known as pods, which can be booked through its website and app. Each pod is equipped with app-controlled door access, customisable lights, Wi-Fi, Bluetooth speaker and an air conditioner, with prices starting at $10 per night.
The startup’s latest financing was led by Horizons Ventures, which is the private investment arm of Asian tycoon Li Ka-shing, and return backer Alpha JWC Ventures. Kakao Investment, Sequoia Surge and Mallorca Investments also participated in the round.
Bobobox’s Series A funding is likely to have been negotiated before the COVID-19 pandemic brought the travel and hospitality industries to a halt across the world. In its home country Indonesia, several startups in the travel and hospitality sectors have undertaken severe cost-cutting measures to stay afloat.
Indian unicorn OYO is understood to have laid off more than 200 people in the archipelago, while rival RedDoorz has declared a force majeure, citing the pandemic. More recently, hotel aggregator Airy Rooms, an affiliate of travel unicorn Traveloka, confirmed it was shutting down its operations at the end of May as the virus crisis drove it out of business.
Bobobox co-founder and CEO Indra Gunawan said the startup’s lean operating model has allowed it to maintain a low burn rate, giving it a longer operational runway than most traditional players.
“Despite the turbulence due to the pandemic, we are grateful that we can still lock in investment from global investors. Our discipline to maintain strong unit economics across all branches is what makes it an attractive investment opportunity,” he added.
Targeted at business travellers and those looking for budget-friendly accommodation, Bobobox operates nine properties, which offer 572 pods in total, in Bandung, Jakarta and Semarang.
Launched in June 2018, it was selected for the first cohort of Surge, Sequoia’s startup accelerator programme for India and Southeast Asia, in 2019. Each selected startup gets $1-2 million in funding upon joining the programme and the opportunity to raise more capital from a curated panel of investors at its close.
The startup had last disclosed raising pre-Series A funding from Alpha JWC, Genesia Ventures, Sequoia Surge, Agaeti Ventures and EverHaüs in 2019. Including the latest funding, it has now raised $15 million in total.
While Indonesia has extended its large-scale social distancing order until May 22, its terms have been vague and many citizens continue to go to work and use mass transit. According to Bobobox’s website, four of its nine locations remain shut until July 31 due to government regulations.
The startup claims its functioning hotels are currently being used by locals working remotely and those who seek to avoid long commutes to work. It has also installed more than 100 sleeping pods at hospitals for doctors and other health workers.
With the new funds in place, Bobobox plans to grow its tech team and enter new geographies in Southeast Asia after the pandemic is over.
“We want to be the best player in the below-$15 accommodation class, and we know that we cannot do this alone. We are open to partnership opportunities with small property owners, investors, large-scale property developers and local government to speed up our expansion plans. While things might seem a little blurry right now, we will soon realize that travel is inevitable, and the industry will bounce back,” said Bobobox co-founder and president Antonius Bong.
Early investor Alpha JWC is betting on Bobobox emerging out of the virus crisis stronger.
“With a steady performance that we have seen since we first invested in Bobobox back in 2018, we are confident Bobobox not only can weather this storm but also strive to become the region’s industry leader,” said Alpha JWC managing partner Chandra Tjan.