(Bloomberg) -- Amit Saberwal went through many a sleepless night when he first began pitching the idea that became Southeast Asia’s top online budget-hotels service, RedDoorz.
Few financiers paid attention back then to a middle-aged former hotel sales executive. His vision of quality $20-a-night rooms seemed impractical for a largely neglected market. And rival outfits run by younger founders, like Rocket Internet-backed Zen Rooms, hogged the spotlight. It took about six months before he finally scored a modest $540,000 from his first backer, Singapore-based Jungle Ventures Pte.
Four years on, many of his competitors are gone and the erstwhile insomniac likes to talk about how RedDoorz helps customers get a good night’s sleep in 1,400 hotels across 80 cities in Indonesia, Singapore, Philippines and Vietnam. Fundraising has gotten easier: on Monday, the company disclosed a $70 million cash infusion from Asia Partners, co-founded by Oliver Rippel, a former CEO of Naspers Ltd.; Rakuten Capital; and Mirae Asset-Naver Asia Growth Fund.
Saberwal, now 49, finally convinced backers with a prudent business plan that eschewed the heavy spending others favored, said Anurag Srivastava, managing partner of Jungle Ventures, which has either led or joined each of RedDoorz’s funding rounds since. “Amit wasn’t a 24-year-old kid with a lot of execution risks,” he said. “We had faith and trust in him that he’d hustle through eventually. He’s built the company prudently, without craziness, without crazy cash burn.”
Four-year-old RedDoorz has now raised about $140 million since its inception from investors including 500 Startups, SIG and Qiming Venture Partners.
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The latest funds will help Saberwal fend off SoftBank-backed Indian lodging startup Oyo Hotels and Homes, which plans to pour $100 million into Indonesia -- the largest market for RedDoorz -- as part of a global foray that encompasses the U.S.
Both startups are riding a surge in independent travel as younger Asians grow more affluent and develop a taste for going it on their own. By 2022, Southeast Asia should host a middle class of 350 million, according to Bain & Co. There are 125,000 budget hotels in the three-star or below segment and RedDoorz aims to grab 2,000 of those by the end of this year.
Similar to Oyo, RedDoorz signs on budget hotel owners, provides them with software and standardized supplies, and trains their staff. They split the revenue. Unlike Oyo, Saberwal said he prefers to focus on Southeast Asia. He’s gearing up to enter Malaysia and Thailand this year before expanding to other nations like Cambodia.