In early 2020, Aahan Bhojani moved to Boston to work with a travel fintech startup. Having signed a long-term rental contract, a short vacation to Dubai seemed like a good idea.
That was precisely when the world was brought to a standstill by a spiky, single-celled organism. As countries shuttered down their borders, Bhojani was stuck for a long time in the UAE, luckily the country where he was born and brought up.
The travel restrictions stretched from days into months. Remote working was working out well for Bhojani, but the monthly rent for the Boston house rankled.
It was during those bleak days of the pandemic that the idea of Silkhaus took shape. Since then, the Dubai-based proptech startup has caught the attention of investors and generated the largest-ever seed round in the Middle East when it raised $7.75 million (AED28.47 million).
How it started
“I was inspired far before, but it all came together during the pandemic,” says the 30-year-old alumnus of Yale and Harvard Business School. “Staying in a 250 sqft area with a standalone bed for months as a corporate traveller myself, I realised there is something broken about the long-stay experience.
“I also felt that with Airbnbs in my student days. Finding a good alternative accommodation on these online travel aggregators was often like pulling a needle out of a haystack. You didn’t know what you were getting. It was wonderful when it worked. But when it didn’t, expectations were really let down.”
In the last few years, while working in the US, Bhojani sensed that the concept of travel was changing. The pandemic merely accelerated that process.
“Post my time at Harvard, I had joined Lola.com and driving product for them. We were building software that helped businesses book and manage their travel expenses. It was there that I began to see that businesses of all sizes were interested in alternative accommodation and short-term rentals, much more than hotels. That’s kind of where my ‘aha moment’ came,” Bhojani adds.
“And when I couldn’t extricate myself out of the Boston lease, I felt that residential real estate was letting me down as a modern consumer. I was not unique. I just don’t spend 12 months in the same place, and I think that’s how our generation lives today. This is a universal reality.
“There has been this blurring of short-term, medium-term and long-term travel. There’s also been a blurring of business and leisure travel. As opposed to traditional hotels, people are looking for immersive, local, short-term rental experiences and alternative accommodation. And that’s the whole business model of Silkhaus. I’ve understood how big an asset class it possibly can be for owners if they take their residential real estate and activate commercial-style yields. We have done that with the help of technology.”
Silkhaus is headquartered in Dubai with its engineering team based in Bengaluru, India. It has now come out of stealth mode and looking to expand its presence beyond Dubai. The fund raised is being used to build the team, which is already 21-person strong, with people recruited from the likes of Microsoft, Uber and Airbnb.
Future perfect
“So far, Dubai is the only market that we have activated. But we are now gearing up for expansion across several geographies. The GCC is very much of interest. Going deeper in the UAE is something we are already working on. We are looking at Saudi Arabia, and then India and Southeast Asia. We’re sequencing the right cities now,” says Bhojani, whose first name, in Sanskrit, translates to ‘sunrise’.
And he is confident that short-term rentals, with an estimated market of $13 billion and growing at a rapid pace, is the sunrise part of the hospitality industry.
“Not just hospitality, it is a sunrise interest industry in its use in real estate as well. It is an asset class in the making. Short-term rentals have been institutionalised in the West. Vacation rentals have been around for a while now, especially in Europe. There is a huge acknowledgment of the wonderful customer experience that this business model provides to both leisure and business travellers, as well as consistently making above market returns for asset owners,” explains Bhojani.
“Rather than just individuals owning the real estate that operate short-term rentals, there are now prominent real estate investment funds and private equities that buy these assets in bulk. I think the same is about to happen here in Asia and we want to be at the forefront when that happens.”
The differentiator
So, how different is Silkhaus from online travel agents like Airbnb and Booking.com?
“We are not competitors to Airbnb, or booking.com. Rather, we are partners as they provide us access to the highest quantity and quality of verified short-term rentals for diverse audiences. They provide us the access to demand, we bring in the short-term rentals supply. So, it’s a 100 percent synergistic business model. Airbnb is our largest partner,” says Bhojani.
“Airbnb, Vrbo, Booking.com are demand aggregators and have done a great job at bringing eyeballs and unique audiences to the table. Supply, though, is a hyper-fragmented industry and there has been no aggregation of supply, until Silkhaus.
“There are almost 25,000 short-term rentals here in Dubai and 550 companies are operating them. These are often small companies that do a great job, but in a piecemeal manner. They’re unable to leverage economies of scale. They don’t necessarily have access to technology that allows them to widely distribute or automate pricing to optimise revenue. We’re bringing the benefits of scale and technology to this whole ecosystem.”
The secret to raising funds
The record seed funding is already a feather in his cap, but Bhojani says it wasn’t the easiest task in the world to convince investors.
“I think raising money today is not easy at all. People are very stringent with regards to standards that they hold in fundraising processes,” he explains.
“So, it was a great learning experience for me. My key takeaway is that you need a point of view and you need a vision. You need to be able to do something differently. You need to have a line of sight into a disruption that can happen in an industry and that viewpoint needs to be extremely credible. It needs to come from a huge degree of research. It needs to come, ideally, from experiences that you’ve had, because building a business is not just about numbers. It’s about your conviction in the problem.
“I think what our investors saw was that I understood this problem and that I had a unique, bold and ambitious point of view on it.”
A perfect place called the UAE
The UAE provides the perfect environment for a startup, he adds, especially for a business like his. The government recently announced the UAE Tourism Strategy, which aims to make the UAE one of the top 10 global destinations and attract 40 million hotel guests by 2031. The Golden Visa programme also helps.
“The UAE is immensely important. This is a startup nation with a spirit of entrepreneurialism,” says Bhojani.
“The way the government functions here is truly entrepreneurial. There are so many wonderful, inspiring success stories in this young but extremely ambitious nation. I have also loved seeing an economy that has really been empowered by real estate over the last 20 years.
“With extremely progressive regulations for the use of residential real estate for commercial purposes, I fundamentally believe this is the best place in the world for us to start Silkhaus. And then there is the tourism agenda and commitment to making UAE a talent destination with incentives like Golden Visa.
“We really see ourselves as the landing pad to a market like the UAE, when so many people come in. I think our business model is highly relevant to the region.”
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