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Hostel startup scheme for entrepreneurs in India

23 March 2015
23 Mar 2015 -

BENGALURU: Zostel, a chain of backpacker hostels, is launching a “startup incubation” programme giving seed funding of up to Rs 10 lakh to entrepreneurs to open their own ‘Zostels’.Zostel

The 20-month-old startup has also decided to make all its financial records, customer databases and proprietary technologies publicly available this week.

The scheme, to be launched this weekend, would also provide technology, marketing, analytics and a full customer support system to 30 individuals to open backpacker hostels in cities of their choice. Entrepreneurs will have freedom to customise, including hostel name.

“We are not charging for anything, we will be giving them the brand and technology but there is no ownership we are taking,” said co-founder Paavan Nanda, 27, insisting the initiative does not constitute a franchisee model and Zostel will not be charging for any royalties. “We are just going after the brand and the community.”

According to Nanda, numerous corporates had reached out to the startup, stating interest in converting their properties into hostels. Zostel has eight properties in Rajasthan, Uttar Pradesh, Goa, Gujarat and Delhi. “In the next six months, we will get them on board through the programme. In another six months, there will be 30 new properties pan-India,” said Nanda, adding that it will also expand internationally by the end of the year.

“This is a great way to seed a franchise network and get it off the ground and disrupt timelines of scale,” said Ravi Krishnappa, lead investor in Stayzilla, a homestay aggregator. “It will be interesting to find out how many take up this challenge and get into this for the long haul rather than a short stint.” According to people in the know, Zostel plans to use its expanded reach to later showcase scale and raise its next funding round.

Source: The Economic Times