Established in 2015 with the vision of creating a line of premium budget accommodation that promises travellers a consistent experience, RedDoorz has 450 properties, mainly in Indonesia, with its largest hotels being in Jakarta, Bali, Bandung and Surabaya.
Jungle Ventures also participated in the company’s series A funding last year, which drew the Asia Investment Fund of Susquehanna International Group, a global quantitative trading firm based in Philadelphia, and the International Finance Corporation (IFC), a member of the World Bank Group.
CEO and founder Amit Saberwal told DEALSTREETASIA: “RedDoorz raised a seed round from Jungle Ventures and Steadfast Capital, a pre-Series A round from 500 Startups and Jungle Ventures and a Series A round from SIG, IFC and Jungle. We don’t release details of our funding amounts for competitive reasons.”
RedDoorz has expanded into Singapore and will soon be launching in the Philippines. Its concept is based on working with hotels and guest houses to resell their rooms while maintaining a guaranteed standard of quality and service for customers.
This is done through maintaining a minimum standard – including free WiFi, satellite TV, and more – and it lets customers focus on crucial factors such as location and price. Its service is mobile-focused, with the company reporting that 70 per cent of bookings are through mobile devices. It also offers a concierge service and 24-hour customer assistance.
During an interaction with this portal, Saberwal said: “All our Indonesian cities and operations are poised for profitability by end of 2017.”
He also noted that in 2016, the company saw “12X growth in our revenue and stayed room nights numbers.” with continued growth in 2017.
“Our igo-to-market was Indonesia. Understanding user behaviour, finding the right talent and communication strategy for customers, partners and employees were some of the challenges we faced and overcame successfully,” he said.
“Venture debt providers look for companies that have good cash flow and the ability to repay their debt, so I’m pleased that this partnership with InnoVen shows its confidence in the way we execute our business model,” said Saberwal in an official statement.
Southeast Asia’s market size for online hotel bookings will reportedly increase from $6.6 billion in 2015 to $36.4 billion by 2025 with a 19 percent compound annual growth, according to a Google study.
“We are constantly on the lookout for companies that have a solid track record and good backing and the unit economics of RedDoorz have been impressive,” said Chin Chao, CEO of Singapore and Southeast Asia at InnoVen. “Venture debt offers a crucial complementary source of funding for startups that have reached a strong state in their development and want to avoid equity dilution.”
In statements to this portal, Innoven highlighted the “strong and experienced management team who is building a compelling, market-leading business in the branded-stays vertical in Indonesia,” as part of the investment rationale.
They further added, “Venture debt will continue to grow as more and more founders and VCs become familiar with and use venture debt. Founders and VCs will increasingly realise that venture debt is an effective way to minimise equity dilution while at the same time providing additional capital to accelerate growth and increase valuation,”
In the context of the larger startup/VC ecosystem, Innoven Capital commented: “One current topic of discussion in the ecosystem is the paucity of VCs who focus on Series B and Series C rounds of venture funding. This, however, impacts the entire ecosystem and not just Innoven. We hope this issue will sort itself out as the ecosystem continues to evolve and mature.”