It hasn’t been a rosy 2017 so far for the startup ecosystem in India. While the unicorns are constantly struggling to raise funds at their valuations, there are other well-funded startups that are shutting shop. Stayzilla is the most recent casualty.
Stayzilla, a company who claimed to be ‘India’s largest homestay network’ has shut down after having raised $34 million in multiple rounds of funding.
The founders of Stayzilla are saying that they are not shutting down but going for a reboot instead.
“I would like to announce today that we will be bringing to a halt the operations of Stayzilla in its current form, and looking to reboot it with a different business model……New bookings on all Stayzilla platforms—website and app—are now suspended. Bookings with check-in dates on or before 28th February 2017 will be honoured. Any booking with check-in after that date will be cancelled and the guests will receive 100 percent refund.”
Yogendra Vasupal, CEO, Stayzilla
The company reached a network of over 50,000 accommodation options across more than 900 towns in India, and clinched deals with local government tourism organizations, but it looks like it ran out money — although Vasupal did not mention the current financial situation in his blog post.
Stayzilla had raised close to $30 million in funding so far, besides an undisclosed amount in its Series A round, from investors including Nexus Venture Partners and Matrix Partners. In February 2015, it raised $15 million in Series B funding led by venture capital firm Nexus Venture Partners, with participation from existing investor Matrix Partners India.
Vasupal was particularly reflective in his post, explaining how, as a founder, his own objectives were altered as the company ramped up.
“The initial 7 years were all about having negative working capital, positive cash flow and a sustained ability to fund our own growth. Those were the only metrics we tracked. In the last 3–4 years, though, I can honestly state that somewhere I lost my path. I started treasuring GMV, room-nights and other ‘vanity’ metrics instead of the fundamentals of cash flow and working capital,” he explained.
Vasupal said he sees Stayzilla becoming “a hassle-free distribution channel going out to the right audience.” He made it clear that the company will focus all its energies on the supply side in its next avatar, which will allow it to build on its core strength.
Specialised solutions, such as ‘Stayzilla Verified Homestays’, could be in the offing, the post suggests.
In the online hotel booking space, Stayzilla competed with online travel agencies such as MakeMyTrip, VC-backed Yatra.com, Goibibo and Oyo Rooms, among others. The segment has also seen the emergence of startups like Findmystay, a reverse-bidding OTA that enables customers to book hotel rooms at the price of their choice.