Bengaluru-based Ruptub Solutions, which owns online hotel chain Treebo, is in the process of raising $457,748 from media conglomerate Bennett Coleman & Co Limited (BCCL) through an equity share and warrant issue.
Treebo will issue one equity share to BCCL for Rs 155,741 and five warrants totalling to Rs 3.3 crore, regulatory filings show. While the funding proposal is approved by the company’s board of directors, it is yet to be vetted by the shareholders. Post the issue, the Times Group will hold 5.586% stake in the company.
In 2016, Treebo raised $16 million in a Series B round from media company Bertelsmann along with existing investors SAIF Partners and Matrix Partners.
The funding comes amid Treebo handing pink slips to roughly 20% of its 750 strong workforce in July 2019 on account of financial distress arising mostly from intense competition in the sector dominated by Softbank-led OYO, MakeMyTrip and Yatra. The company in 2018 too laid-off around 80 employees as a part of cost-cutting measures.
In June, Treebo’s peer, FabHotels, raised $7.9 million in a funding round led by Goldman Sachs along with returning investors Accel and Qualcomm Ventures.
Despite the gloomy situation, all hope is not lost for Treebo as it managed to post 66% jump in its revenue for the financial year 2018-19 to Rs 68 crore on back of robust fees from hotel owners and accommodation charges while maintaining losses at Rs 118 crore as against Rs 114 crore in the previous year, separate filings show.
The company’s losses grew only marginally in FY19 despite a 20% increase in the total expenses to Rs 195. During the year, Treebo increased its spending on rent, commission, advertisement, hotel operations.
Founded in 2015 by Sidharth Gupta, Rahul Chaudhary and Kamal Jeet Jain, Treebo is in the process of expanding its hotel network and expects investments to pay off in the long term. As on March 31, Treebo had operations in 450 hotels in 95 cities including metros such as Mumbai, Pune, Chennai, Kolkata, Bengaluru, Hyberabad, Ahmedabad. In August, Treebo had launched Hotel Superhero, a platform to on-board mid and small scale hotels.
“Though the company posted a net loss for the year, the board and the management is confident that these investments will hold the company in a good stead for future growth and profitability,” said the company in its annual report.