In a key milestone for the backpacker hostel industry, The Hosteller, one of the leading chains of experiential and budget-friendly hostels, announced that it has successfully closed Rs 32 crore or approximately $4 million in its latest Series A funding round. The funding was led by V Cube Ventures and key participation came from Lets Venture Angel Fund, Angelist, amongst other highly reputed investors underlining the raft of confidence in the growth trajectory and market potential of The Hosteller.
PC: ET Hospitality
Internal documents accessed by Entrackr from the Registrar of Companies (RoC) show that The Hosteller board approved a special resolution to issue 10 equity shares and 64,281 Series A compulsorily convertible preference shares at an issue price of Rs 4977.5 each. The result was a large funding round of Rs 32 crore. Of this, Rs 22 crore was contributed by V Cube Ventures that became the lead investor in this round. Other contributors are LV Angel Fund, AngelList, Merlin Marketing, and 14 angel investors.
The infusion of capital will be utilized for strategic expansion of the hostel network of The Hosteller, enhancement of marketing efforts, and other general corporate purposes. With this clear scale-up focus while offering state-of-the-art customer experience, The Hosteller will aim to leverage this funding to further innovate and scale higher as one of the leading players providing affordable and experiential lodging options to backpackers and travelers.
Interestingly, this Series A funding is a major milestone for The Hosteller, which comes three years after it successfully closed its $1 million seed round back in 2021. Based on post-allotment valuation, insights from TheKredible peg the company at about Rs 182 crore or $22 million, hence showing that growth potential and value proposition of The Hosteller are indeed promising in this competitive landscape.
Post the new funding round, V Cube Ventures will hold a sizable 15% stake in The Hosteller, demonstrating its commitment to the company’s vision and growth trajectory. The second in the list is Lets Ventures with 3.45% stake, while Pranav Dangi, Founder and CEO, The Hosteller, and his family retain 35.28% stake in the firm, indicating continuous commitment to the success and hence strategic direction of the Company.
Incorporated in the year 2014, The Hosteller has carved a niche for itself as a leading chain of backpacker hostels, offering a blend of affordability, quality lodging, and immersive experiences to travelers across the country. With more than 50 hostels pan-India in its portfolio, the company has emerged as strong, serving a clientele in search of value accommodation options integrally combined with unforgettable travel experiences.
For the fiscal ending March 2024, The Hosteller reportedly attained an INR 55 crore top line with a net profit of INR 4 crore, depicting excellent financial health and efficiency of operations. Again, in times to come, the brand is very much likely to scale up its footprint by adding 75 properties this year and keeping itself strong in the competitive hostel business.
The firm is competing with several other well-known players like goSTOPS, Wudstay, and Backpackers Panda, among others. Even then, The Hosteller stands tall in its commitment to deliver great value, customer-centric services, and lifetime experiences to the travelers in search of budget-friendly yet enriching stays.
The recent Series A funding round now sets the pace for further growth and continued innovation by The Hosteller in this dynamic hospitality landscape, committed to leading toward a future where more could be offered and guest satisfaction reached an unparalleled level.
