South Korean retail firm GS Shop and early-stage venture capital firm Bon Angels have participated in a $4.5- million bridge funding for Vietnamese accommodations startup Luxstay, according to a press statement.
Luxstay said it expected to close its Series A fundraising in 2019. DEALSTREETASIA understands the next financing round could be worth at least $10 million.
Founded in 2017, Luxstay is a home-sharing platform focusing on the luxury customer segment. The local short-term rental value was more than $100 million in 2018, compared to the local $7 billion accommodations market.
“In developed countries, home-sharing accounts for 10-20 per cent of the home-rental market. This shows a huge opportunity for this industry in Vietnam, which is expected to reach $2-4 billion in 2025,” Luxstay said.
The company works with local partners in other countries such as Japan and South Korea, which have a large number of tourists to Vietnam and vice versa. GS Shop and Bong Angels will be important connections for the company to other strategic partners and investors in Korea in pursuit of international expansion, it added.
The Airbnb rival in Vietnam said it targeted revenues of over $300 million in 2023, and a home rental market share of 30 per cent.
South Korean tourists to Vietnam reached 3.5 million in 2018, up 44 per cent from 2017 compared to the 20 per cent growth of all international tourists, according to Vietnam National Administration of Tourism. Meanwhile, the total spending for tourism in 2018 amounted to $25 billion, of which the accommodation sector accounted for 28 per cent, or about $7 billion, and is expected to increase to $13 billion by 2025.
Tapping this growing trend, travel tech was one of the most funded tech verticals in Vietnam in 2018 that saw an aggregate of $889 million.
When it comes to the economic partnership between Korea and Vietnam, there has been substantial development over the years. On the venture capital front, a lot of Korean investors have been pursuing early stage opportunities.
GS Shop, a limited partner of 500 Startups Vietnam, recently made its debut direct investment in e-commerce startup LeFlair. Meanwhile, Bon Angels, the early backer of local unicorn Woowa Brothers, has also invested in several Vietnamese startups. Last October, it launched its third early-stage fund at 50 billion won ($42 million) and aimed to expand investment in Southeast Asia.