Yesterday, we reported that Hotels.ng has secured a $1.2 million series A investment round from the Omidyar Network and EchoVC. Thoroughly exciting news, because the three year old Nigerian startup founded by Mark Essien in 2012 is definitely now valued at millions of dollars. But how many?
The parties to the transaction declined to to give us more information about the structure of the deal, but an email interview with Mark before we broke the news dropped a useful piece of information which when put with other pieces of existing information gave us a picture — as clear as you can get with some back of the envelope math — but a picture nonetheless.
Me: Can you share details of investment? Like who led the round, and how much did they each bring to it?
Mark: No further details apart from what is in press-release.
Me: And at what valuation was this round raised?
Mark: A valuation that means that Jason $225k investment has more than 5x’ed in value.
Hmm. So let’s see. We know that Jason (Spark) owns 30 percent equity Hotels.ng via the $225,000 seed investment, which puts the startup’s post-money valuation as at then at $750,000. If Jason’s investment in Hotels.ng has at least quintupled as a result of traction and new funding, then Hotels.ng is now worth at least $3.75 million.
I’m actually leaning toward > $4 million.
Mark of course refuses to confirm our educated hypothesis, but he graciously answers the rest of the questions in my interview which you can now read.
How would you describe the fundraising process over the past few years? Hard or easy?
Mark: Raising money for African startups is a long and arduous process. Even for European startups it’s hard, and Africa is a much riskier place to invest in. Many of the traditional investors active in the African space are more used to investment opportunities in retail or oil or mining, and technology is not something they understand. So explaining the potential of what one is doing is certainly time-consuming and hard.
How many investment offers have you fielded? Acquisitions offers?
Mark: At the start it was quite hard to raise investment. Now that our numbers are strong and the business is growing fast, I am actually constantly getting investment offers. What’s important at this stage, though, is working with the right people.
Who do you consider to be the biggest competition in the hotels space in Africa, and how do you see that market opportunity evolving going forward?
Mark: The biggest competition are certainly the billion dollar international hotel booking websites. Think Hotels.com or Booking.com. I believe that what we are doing is not quite obvious, and our methods of doing it are what make the difference. So the big startups can come to compete, but they will have to learn how to operate in Africa first.
Would you say that being a technical founder was essential to Hotels’ gaining what share and traction in the market that it does today?
Mark: I think having a technical founder allows you achieve 10x more with the same amount of money. A large part of cost is technology and operations, and engineering ability allows you figure out cheaper and faster ways of doing these.
Hotels.ng is expanding its staff base, and you’ve been putting out these quirky tests. Why? And what kinds of roles are you looking to fill in the near to long term?
Mark: I have found out something: experience matters much less than raw ability. When you have people with great ability working with you, anything can be learnt. If I find anyone I feel is extremely talented, I want them to work with us. The roles we are looking for – technical and sales!
Got more questions for Mark? Mark Essien will be joining us on Radar today at 4pm (GMT +1) for a realtime interactive session where you get to ask him anything. Seriously.