RedDoorz raises $1m in venture debt to grow in the crowded budget hotel space

Photo credit: MakeMyTrip, helping to build it up all the way to IPO and beyond.

MakeMyTrip went public on Nasdaq in 2010, debuting at US$14 per share and immediately seeing its value soar 89 percent. Amit was instrumental in growing the business and moved to Singapore to oversee its Southeast Asia expansion. But after eight and a half years with the company, the entrepreneurship bug won him over.

Venture debt is getting increasingly popular as a funding mechanism in Southeast Asia.

“It was a heart-wrenching decision,” he tells Tech in Asia. Not only he was walking away from a company he felt a part of, the move would affect both his and his family’s lifestyle as well. They would have to make it with less money and more uncertainty. Regardless, his wife and children stood by him and the journey began.

Amit started Commeasure, which provided tech for smaller hotels to grow their online presence. But soon he realized that small hotel owners in Southeast Asia needed a different kind of help.

“Even with the best tech, they would remain faceless hotels,” Amit says. “So we had to put a brand on them.” Singapore-headquartered RedDoorz launched in 2015 to help these same small hotels increase their traffic through an online platform that offers booking, payments, customer service, and loyalty programs. The startup ensures that rooms on its website are above a set standard and makes money out of successful bookings.

Debt vs equity

RedDoorz announced today it has raised US$1 million in venture debt from venture lending firm InnoVen Capital. It works with hotels across Indonesia, in Jakarta, Bali, Bandung, and Surabaya. Recently launched in Singapore, it’s now expanding to the Philippines as well.

Venture debt is getting increasingly popular as a funding mechanism in Southeast Asia’s startup ecosystems. It’s a type of loan companies can use to purchase equipment or just to refuel between VC fundraises.

See: Innoven Capital expands to Southeast Asia with $200 million venture debt for startups

“People look at it as free cash, but it’s not at all – it has to be paid back,” Amit says. He feels it’s a good way for a growing startup to balance between taking up debt and surrendering equity, as venture debt doesn’t dilute a company’s equity pool. “If you are at that level where you’re taking off and it makes sense to close a large equity round in the future, there’s no point in raising an interim venture round.”

Other startups InnoVen has financed in the region include stock image marketplace 123RF and digital media services provider Conversant.

RedDoorz has previously raised funding from Jungle Ventures, 500 Startups, the Asia Investment Fund of Susquehanna International Group, and the International Finance Corporation.

It plans to raise its series B round “sooner rather than later.” “We have enough cash right now so we will continue to execute,” Amit explains. “I think a quarter down the line we will be extremely well placed to get into that territory.”

The quest for Southeast Asia