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Zostel Hospitality Private Limited, a Jaipur-based backpacker hostels chain for young travellers, is in talks with global investment firm Tiger Global to raise up to $15 million (approximately Rs 95 crore) in a Series-A round of funding, to fuel expansion of its recently-launched low-budget hotel room booking service Zo Rooms.
"Discussions are in a very preliminary stage," Paavan Nanda, co-founder and director of Zostel, told Business Standard, while declining to draw any time line for completing the fund-raising.
Founded in August 2013, Zostel has seven co-founders - IIM-Calcutta graduates Dharmveer Chauhan, Paavan Nanda, Akhil Malik and Tarun Tiwari, Chetan Singh Chauhan and Abhishek Bhutra from IIT-BHU, and MDI-Gurgaon graduate Siddharth Janghu.
Zostel had raised $1 million in a first round of funding from Malaysia-based angel investor Presha Paragash in May 2014. The startup offers centrally-located accommodation to young travellers in hostels with facilities like television, board games, Internet, library and laundry, for Rs 500 per night.
Zostel has forayed into hotel booking and reservation services with Zo Rooms in April 2015. The budget-hotel booking platform currently operates 150 hotels across 12 cities, garnering a commission of 20% per booking.
"We intend to deploy the new fund-raising proceeds to add 1,500 hotel properties across 30 cities to our inventory in the next six months to a year, besides investing in enhancing technologies," Nanda said.
