Venture Investors Look to the Future of Coworking Space

The era of business success co-working space in Indonesia is directly proportional to the popularity and emergence of technology startups. Not only providing a place to work, organizer coworking compete to present a comprehensive entrepreneurial ecosystem to support tenant inside it. Starting from business education events, access to investor networks, to incubation programs.

Since last year, this business has been disrupted due to social restrictions imposed during the pandemic. Not to mention the characteristics of their main consumers, workers in technology, who are more flexible to work anywhere, including doing work from home.

Indogen Capital Vice President Kevin Winsen said, "Industry, all businesses real estate market including co-working space will be affected by the existence of social restrictions [...] But from the conditions economic stress this, I also see this is the right time to evaluate the business model co-working space who can survive and how founder respond to this challenge. I think the player who can survive will be the winner or category leader in this segment for the long term."

Indogen is currently investing in GoWork. Previously they were shareholders of Spacemob before it was acquired by WeWork in 2017.

Funding is still ongoing

According to the data DailySocial get, two big players co-working space local area received additional funding this year. First, there is GoWork, which is reportedly starting a Series C1 funding round. A number of investors joined, including Gobi Partners via the Meranti Asean Growth Fund, and have raised $3,6 million or the equivalent of 51,8 billion Rupiah. We tried to contact company executives to confirm this news, but as of this writing we have not received a response.

Other players who are reported to have received cash injections are CoHive. This year Stonebridge Ventures, East Ventures, Naver, LINE Ventures, and a number of investors filled the investment list in the Series B round with a value of up to $16 million or the equivalent of 230,3 billion Rupiah. The parties concerned with whom we confirmed this funding chose not to comment. These investors are those who have invested in the previous stage.

Investor confidence for business coworking

East Ventures, which is a significant shareholder in the service co-working space CoHive in Indonesia and CirCO in Vietnam, provided their opinions regarding the conditions currently being experienced by these business verticals.

East Ventures Operating Partner David Fernando Audy said, "Flexible space or coworking has become an integrated part of office market trends and will continue to do so. It is believed there will be good demand for the service, when the pandemic subsides. Of course in the short term, mobility restrictions put a lot of pressure on operators. Therefore, it is reasonable to expect some strategic shifts towards market consolidation."

Unfortunately, it is not easy to predict when this pandemic crisis will end. Likewise, the trend of working in this era new normal in the future – especially now that several technology companies provide the flexibility for their employees to work from anywhere.

Kevin continued, “Our hypothesis is that demand for co-working space akan bounce back and keep growing modest. We saw future of working it will hybrid, people are used to new work productivity during the pandemic but at the same time do not want to lose the social function of meeting face to face. As a result multi-location access from co-working space will be strong moat in the long term for address change of behavior this."

Trends during the pandemic

If you look at search trends in recent years, terminology coworking finds increasing traction from year to year. At the start of the pandemic around June-July 2020, this trend dropped drastically although it is slowly starting to creep up.

Menurut report "Coworking Space Global Market Report 2021" from Research and Markets, Covid-19 is also estimated to only bring market growth of 2,1%, from $7,97 billion in 2020 to $8,14 billion in 2021.

This growth is due to service providers continuing their operations and adapting new normal.  The market is expected to reach $13,03 billion by 2025 with an annual growth rate of 12%.