The deal has been regarded as a substantial early stage investment for Vietnamese start up.
Luxstay was found in 2017 as an accommodation-sharing platform operating in Vietnam. It differentiates itself from other rivals, including Airbnb, by focusing on the local market with premium products rather than on the global scale that requires financial and human resources.
Luxstay has been known to shake hand with numerous partners in other markets like Japan and Korea, which have a large number of inbound tourists, to enlarge its business activities and customer base.
GS Shop and BonAngels, in this case, will prove to be a critical bridge to help connect Luxstay to other potential investors in Korea.
Last year Sounth Korea sent 3.5 visitors to become Vietnam's second biggest tourist feeder after China.
Apart from GS Shop and BonAngels, other top-tier venture capital investors, like CyberAgent Venture (Japan), Genesia Ventures (Japan), ESP Capital (Singapore), Founders Capital (Singapore) and Nextrans (Korea), have poured some $6 million into Luxstay.
BonAngels is Korea’s first early stage venture capital fund that nurtures the nation’s startup ecosystem in the last 10 years. It currently has an active portfolios in Vietnam’s on-demand grocery delivery Chopp, travel ticket aggregation service V-Leisure and last-min discount coupons and empty seat reservation app Jamja.
According to Statista, revenue in the vacation rental segments is estimated at $104 million in 2019, with an annual growth rate of 17 per cent in the next five years. By 2023, revenue from this segment, which comprises of short-term rental of private rooms or flats, could go up to as high as $195 million.
Home-sharing platform, according to a research by Maybank Kim Eng (MBKE), has now become the new supply of accommodation for many countries in the region, including Vietnam.
Statistics by Airbnb, a rival of Luxstay, meanwhile, showed that Vietnam welcomed some 300,200 inbound guest arrivals that selected the home-sharing platform for their accommodation in 2017. The number of unique hosts was recorded at 5,900 and the average guest stay length was three days.
“Vietnam is seeing rapid growth on the Airbnb platform, with the Vietnamese Dong one of the fastest-growing currencies in the Airbnb payment system,” noted MBKE’s report on tourism in May.