Grabhouse, an online hotel rental startup which is struggling to scale its business, is looking for a buyer, reports LiveMint. As per the report, citing two people aware of the matter, the company has already initiated talks with Oyo and Nestaway.
Furthermore, it is said that the deal could be worth around $5 to $8 million. The company was not able to scale its business due to fierce competition in the market. Grabhouse’s competitors also have more financial backing from investors.
Grabhouse has raised $10 million in a recent funding round. Prior to that, it has raised around $2.5 million from Sequoia Capital and Kalaari Capital. In its seed funding round, the company secured around $500,000.
On the other hand, one of its biggest rival — Nestaway has raised a huge sum of money. NestAway has raised around $43 million from Tiger Global Management, IDG Ventures India, Yuri Milner, and Ratan Tata, chairman emeritus of Tata group, among others.
In the market, other competitors for Grabhouse include NoBroker, FlatChat, Zenify, and many more. A person aware of the latest development said,
Grabhouse has also put their present office in Bangalore on notice. They are likely to either vacate the premises by the end of September or find another company to share the office space.
These are all cost cutting measures to keep the company afloat as long as they do not find a buyer. Oyo is exploring long-stay; hence they have taken interest in Grabhouse. For NestAway, it will increase supply and reduce competition.
Grabhouse was founded by Prateek Shukla and Pankhuri Shrivastava in March 2013. It is a no broker website that helps people find flats, flatmates and tenants quickly. The company claims that people can save thousands of brokerage just through few clicks.
The company has been struggling to keep up with its rivals for quite sometime now. In December 2015, it was reported that Grabhouse has laid-off around 100 employees from the company as a part of its restructuring process. It is currently operating in 11 cities, including Bengaluru, Mumbai, Delhi, Gurgaon, Chennai and Kolkata.
As per India Brand Equity Foundation, the Indian real estate market size is expected to touch $180 billion by 2020. The housing segment alone contributes about 5-6% to India’s GDP while the real estate sector is the second major contributor.