In its pursuit of leadership in the Russian online travel market, online hotel booking service Ostrovok.ru has raised $25 million – its fourth fundraising operation in less than two years.
General Catalyst Partners has led the round, with participation from Accel Partners and Russia’s Frontier Ventures as well as from Russian billionaire Yuri Milner, ex-Expedia CEO Eric Blachford, former UBS Russia head Edward Kaufman, and US business angel Shervin Pishevar.
The startup’s co-founder Serge Faguet told The Next Web that he, together with the other co-founder Kirill Makharinsky, contributed $2 million of their own money in this investment round.
“We’re in it for the long haul,” Faguet said, “and we will likely close more funding rounds, potentially even raise hundreds of millions of dollars in the next few years. We’re really serious about turning Ostrovok into a multi-billion dollar company over time.”
Faguet is a Russian-born entrepreneur and Stanford GSB graduate. Before creating Ostrovok, he worked as an analyst at Google, then founded TokBox, a web-based group video communications provider.
Makharinsky describes himself as a “data virtuoso.” After studying at Eton, then Oxford, he co-founded YouNoodle, an online platform to develop the startup ecosystem; and Quid, a provider of data on innovation and emerging businesses.
4 rounds of funding in 2 years
Launched back in 2010, Ostrovok – “island” in Russian – was initially designed as a flash sales site for travel. In the spring of 2011 – after switching to a classic hotel booking concept – the site secured $1 million from General Catalyst Partners, Kite Ventures and business angels.
Just three months later, in July 2011, Ostrovok raised another $13.6 million from General Catalyst Partners, AccelPartners, Founders Fund and Atomico Ventures as well as from prominent Western business angels.
The startup closed its third round of funding in early 2012, with Blachfold and other angel investors bringing in an undisclosed amount.
So far, Ostrovok has reached 135,000 hotels across the globe, including 4,800 in Russia and neighboring countries – less than what is claimed by its competitor Oktogo.ru, which has just raised $11 million from leading Western and Russian venture funds.
Another strong player, Ozon Travel, is the specialized arm of Ozon.ru, a leading Russian e-commerce player.
Booking.com and some other foreign players also have strong traction in Russia. The domestic online hotel booking market has been estimated by Data Insight at $900 million in 2012.
