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Forest Key

San Francisco’s Airbnb reportedly just raised $100 million at a whopping $1 billion valuation, with high-profile backers like Ashton Kutcher joining the frenzy. But Airbnb is not the only upstart looking to transform the way travelers discover cool places to stay across the globe.

In fact, there’s a pretty hot startup emerging right here in Seattle’s Green Lake neighborhood. It’s called Buuteeq, and the 20-person startup just raised $3.5 million from a group of more than 40 high-profile angel investors and venture capitalists from Seattle.

Backers of the company include former aQuantive co-founder Mike Galgon; super angel Geoff Entress; BuddyTV co-founder Andy Liu; former Microsoft executive Charles Fitzgerald; Groundspeak CEO Jeremy Irish; Razorfish Chairman Clark Kokich; Marchex executive vice chairman John Keister; Zapd founder Kelly Smith; Benaroya Capital and many others.

It is a bit unusual to see such as large syndicate of investors on an early-stage deal, but co-founder Forest Key said that each investor brings unique value to the table. And while Key and co-founder Adam Brownstein considered moving the company to The San Francisco Bay Area — where CTO Dennis Wu is based — the former Microsoft employees say they were extremely happy to get the deal done in Seattle where their families are rooted.

“It is really a Seattle story,” said Key, who came up with the idea two years ago after he struggled to find the Web site of The Datai Hotel in Malaysia and wondered why there wasn’t a better way to find unique hotels online.

While Airbnb serves as a matchmaking service for budget travelers trying to find cheap rooms, Buuteeq has a slightly different approach.

Regalo Del Mar's Web site, powered by Buuteeq

It powers the Web sites of independent inns, bed & breakfasts and boutique hotels, operating everything from the reservation systems to online promotions to mobile sites. Key declined to say how many hotel partners have signed up at this point, but the company is shooting for thousands and already has deals in 10 countries. Examples in the Seattle area include The Bacon Mansion Bed & Breakfast and The Eagles Nest Inn.

Hotel customers pay anywhere from $3,000 to $15,000 per year to utilize Buuteeq’s platform, a fee that Key says is far less than the $100,000 or more that some digital marketing agencies charge.

Furthermore, he said that hotels can get new Web sites up-and-running in as little as three hours. And he added that the Buuteeq-powered sites are optimized for search engines, replacing Flash-based Web sites that are typically “hostile to SEO.”

Key said that “Flash a disaster,” and the former Macromedia employee noted that a number of Buutteeq’s customers are hotel sites that are moving away from Flash-based sites.

The design and SEO enhancements in Buuteeq drive more direct traffic, which leads to higher profits since the hotels don’t have to share revenue with aggregation sites like TripAdvisor.

The new cash will be used to bolster sales and marketing efforts. There certainly are plenty of ripe targets out there, with Key noting that independent hotels and B&Bs represent $220 billion in worldwide gross bookings versus $200 billion for the major hotel brands.

“If you go to Europe or Asia, it is very much independent inventory,” Key tells GeekWire. “And that inventory is not well marketed, and it is not well distributed as compared to Hilton and Hyatt and Sheraton…. As we crack the nut of


how to … sell the product — to make customers aware of it and get them on the platform — we will have a very robust business.”

At this point, Buuteeq employs about 20 people in Seattle, Chile, China and Silicon Valley. As a result of the deal, Galgon plans to join the company’s board. Total funding now stands at $5 million, with the current funding expected to get the company to profitability.

And what about potential competition from Airbnb, which could move upstream to the boutique hotels and B&Bs where Buuteeq plays?

Key said that’s a possibility, though the two companies right now are attacking different parts of the market. Key said he was really excited to see the news about the funding.

“We love (that) because Airbnb is dealing with a class of inventory that falls beneath the hotels currently. They could obviously go up market into hotels, but their specialty today is your couch, my in-law unit or whatever. And they are connecting that, very effectively, with travelers who are looking for something other than a Hilton or Hyatt. So, it speaks to the same general problem of travelers wanting to find a more unique and interesting experience, and having to go to innovative and disruptive technologies to do it.”

A number of other companies are trying to match travelers with unique properties, including HomeAway, Expedia and others. The newly-launched online service from Urbanspoon co-founder Adam Doppelt, Dwellable, also is attacking the market.

But Key said most of those services are largely focused on consumers, rather than building powerful online tools for the hotels themselves.

Key didn’t rule out the possibility of moving Buuteeq to a consumer-focused model in the future, essentially aggregating and displaying the online hotel properties on its platform. “The B2B play is definitely phase one with a strong focus on hosted services. For now, 100 percent of our focus is on serving the hotels directly, but we are open to ways to accelerate their growth which might include doing some lead (generation) and consumer marketing,” he says.

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