The Hosteller, a budget hostel startup for backpackers, has raised about INR 32 Cr ($4 mn). V Cube Ventures SA has led this funding round. The funding round also saw the participation of LV Angel Fund, Unit E Consulting LLP, and several angel investors. This funding on such a scale is a giant leap for The Hosteller, which comes when the industry rebounds. But the question is, can this funding drive the expansion they target in India’s fast-growing travel market?
How Will The Hosteller Utilize the New Funds?
According to regulatory filings, Hosteller raised funds by issuing equity shares and Series A CCPS-compulsorily convertible preference shares to scale up operations and improve its offering for price-conscious travelers.
After the pandemic, the travel industry had just opened its arms to embrace people’s eagerness to travel to new places in India. It is reported that the hospitality sector, based on these reports, recorded occupancy of 66.1% in 2023 across the country, with an average daily rate of INR 6,869, the highest in a decade. That means the travelers are returning and spending more; hence, it is a good time for a company like The Hosteller to scale up.
Is it time to expand?
The Hosteller, founded in 2015 by Pranav Dangi and Sumit Mishra, has established a reputation for providing economical, comfortable hostel experiences in various Indian places. With this new financing, the firm intends to expand and allow more travelers to enjoy its distinctive, affordable hotel brand. This support enables them to reach new cities or improve existing ones.
V Cube Ventures, which entered the Indian market in 2022, now knows what the future holds. For any VC, the existing portfolio includes consumer-facing companies like Kuku FM and Eka Care tagline that spells confidence in businesses selling to regular customers. Essentially, the backing of The Hosteller means they are betting on the trend of low-cost travel with experiences going up fast.
In short, funding of INR 32 Cr for The Hosteller has come at a time when the industry is growing leaps and bounds in the travel arena. With the growth of travel demand uphill, this startup is in a fine position to develop and work for the rising demands of increasing numbers of backpackers across the country. For them, this new fundraiser may nail their position in the country’s fast-growing travel-tech market.
