Treebo has reportedly raised fresh funds from existing investors through series D funding round. While this should spell good news for the fund starved budget hotel startup, this good news has come with a spoiler. The Bengaluru based startup has agreed to take a cut in its valuation to pave way for fresh capital infusion, according to reports.
News portal Entrackr was the first to report about this development. Treebo has so far remained tight-lipped on this issue. The unconfirmed series D funding round includes the participation of all the existing investors – Matrix Partners, Bretelsmann BV and Saif Partners.
The first big obvious sign that Treebo was struggling on the funding front came to the fore when it laid off nearly 20% of its workforce in June last year. Sources claimed that the company was forced to take this tough decision after its funding talks with French hospitality major Accor collapsed.
A realization dawned on the company that taking tough decisions in order to streamline their balance sheet was immensely necessary for future fundraising, sources added.
Although Treebo’s troubles on the funding front were nothing new, the ongoing coronavirus crises have made things further tough for the company. Most Industry experts and investors unanimously agree that small size funding rounds and cut-up in valuation will now be a common thing for hospitality startups in the post pandemic era.
The Covid-19 crises have adversely affected almost all the important sectors of the economy but few sectors like hospitality and aviation sectors have been especially on the receiving end. The hotels across the country registered steepest decline in the occupancy rate during the lockdown period, resulting in massive hit on the bottom line of the entire industry.
Historically, small players like Treebo and Fab hotels have always struggled to match up with the poster boy Oyo Rooms – be it on the funding front or business scale. That said, Oyo’s business model itself seems to be exploding after its aggressive expansion in China and US failed to yield desirable results.
The company had announced a massive layoff, the biggest in the entire budget hotel industry, much before the coronavirus crisis became a global crisis.
According to Techpluto’s analysis, hospitality startups will have to brace for tough times in the wake of unforeseen challenges brought forth by coronavirus crises and cut-up in valuation will be among the many prominent challenges.