A Kenyan accommodation guide website, SleepOut, has received a cash injection from a Dutch venture capital firm, marking the second time in less than a year that the co-founder, Mikhul Shah, is attracting foreign funding for an online business.
The Nairobi-based one-year-old start-up announced on Wednesday that Dutch based Africa Media Ventures Fund (AMVF), has advanced it seed capital to finance expansion across Africa and the Middle East.
The Dutch fund will acquire an undisclosed stake in SleepOut.com for its injection of $200,000 (About Sh16 million) into the business.
â€œIn taking this big step forward we wanted a partner that could bring their wealth of industry expertise to see SleepOut consolidate its position as the regionâ€™s leading social accommodation marketplace and we look forward to working together as we expand across the region,â€ said chief executive of SleepOut and Mr Mukhulâ€™s co-founder, Johann Jenson.
In mid last year, Mr Mikhul announced the sale of a 25 per cent stake of Eat Out, an online restaurant guide that he founded in 2009, to AMVF. The cash was to be used to finance expansion into Uganda, Rwanda and Tanzania.
SleepOut plans to use the cash for re-launch of its website and entry into 10 countries across Africa and the Middle East by late this year.
Launched in June 2012, SleepOut has positioned itself as a provider of a secure platform for providing information on accommodation including hotels, property and links to agents in Kenya. It has listed over 700 accommodation destinations.
Users of the site can pay online for their bookings. SleepOut makes money by charging accommodation suppliers a listing fee.
The growth of e-tourism has seen more people opt to go online to shop for their holiday options. Tourists have the option of booking directly through a properties website or use websites such as SleepOut to look at the various options.
Kenya has in the recent years increasingly attracted international agencies and multinational staff while a growing middle class is proving a fertile investment ground for the hospitality industry.
Africa Media Ventures Fund (AMVF) focuses on technology-based media companies that have the high growth potential. AMVFâ€™s managing partner Lot Carlier said the partnership will provide SleepOut with financial muscle and technical expertise to build its business.
â€œAs internet penetration and e-commerce increases on the continent a new consumer class is emerging and SleepOut is simplyat the right place at the right time,â€ said Mr Carlier.