Russian hotel search engine and booking platform Ostrovok is cutting a third of its workforce just three months after a high-profile $25m Series B funding round.
Announcing the “very difficult” news in a company blog post yesterday, cofounder Serge Faguet said the company wants to break even and make sure it can attract “substantial additional capital” for future growth. He told TechCrunch’s Mike Butcher via email yesterday that the company still employs about 130 people, which implies it previously employed just under 200.
Those who are leaving the company will be compensated with three months full salary/bonus and their options in the company will be vested.
Faguet stressed that those who are leaving did not work badly and said they were drawing attention to the news to help them find new jobs. The company’s strategy will remain the same, he said.
Ostrovok has expanded at a whirlwind pace since Faguet, a serial entrepreneur and ex-Googler (right), and data whiz Kirill Makharinsky founded it in 2010. By November 2011, it employed close to 90 people and had closed a $13.6m Series A round with Peter Thiel’s Founders Fund, Niklas Zennström’s Atomico, Esther Dyson and HotelTonight CEO Sam Shank, among others.
At the time of the $25m round in March 2013 – led by General Catalyst Partners with participation from Frontier Ventures, Accel Partners, Russian internet tycoon Yuri Milner, former Expedia CEO Eric Blachfor and others – the company spanned about 135,000 hotels in 200 countries.
Ostrovok is still in rapid growth mode: in yesterday’s blog post, Faguet said it recently hit 100,000 bookings and grew by 50 per cent in the last quarter. While the company will no doubt need to hire new staff in future, it will do so more slowly, he said.
Ostrovok’s competitors include Priceline’s Booking.com and local rival Oktogo, which currently claims about 5000 hotels in Russia in its database and about 250,000 worldwide. The online hotel booking market in Russia was worth about $900 million in 2010, according to Data Insight (as quoted in East-West Digital News).
Images via Ostrovok
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