How A M’sian Coworking Space Bagged RM10mil Funding Despite COVID-19 & WeWork’s Delayed IPO
“The delayed WeWork IPO and COVID-19 pandemic has definitely made funding a little harder to raise than in previous rounds,” Stephanie Ping, WORQ CEO and co-founder told Vulcan Post.
“Investors are much more discerning in this environment and demand solid numbers and conduct heavy due diligence on our business model. In the past, they would follow a lead investor’s decision, but no longer.”
So, what does she attribute the success of WORQ’s RM10 million funding round announced today to?
Stephanie replied that it boiled down to 4 things:
WORQ’s solid financials and profitability,
Its sustainable business model with controlled risk,
The huge market of RM4.4 billion in Malaysia alone,
And a formula for the coworking space market that finally works.
The coworking space brand has been profitable since its inception in March 2017, with its outlets taking about 3 months on average to reach full capacity.
In the last 2 years since its last fundraising round, WORQ has grown its footprint by 7x and its revenue by 560%.
A Goal Of 1 Million Square Feet In 5 Years
The RM10 million funding comes from 7 follow-on investors, including the regional investment group Phillip Capital.
WORQ has also secured loan offers from 6 banks including Affin, and will use the funds to grow its space under management by 100% to meet its goal of 1 million square feet in 5 years.
This will be done through adding locations and expanding its current outlets, as well as acquiring other loss-making spaces that need a turnaround into its portfolio.
“Landlords are seeing a decrease in rental yields and oversupply in the property market. We wish to work with them to help revitalise their spaces and also to introduce them to an innovation mindset,” Stephanie said.
WORQ has also expanded its services to include WORQ Enterprise, a Space-On-Demand division dedicated to consulting and customising workspaces for companies.
“With this, WORQ is able to provide extreme flexibility and end-to-end real estate solutions such as Business Continuity Planning, a disaster relief site solution whereby a company has a space-on-standby in case of unforeseen circumstances,” Stephanie explained.
15% Growth In Memberships Despite The Pandemic
During the MCO, WORQ saw a 15% growth in memberships since February 2020.
To further add value to its members, the coworking space will soon be launching its proprietary community app called SPARQ to create an online-offline experience for users.
According to the team, it will spawn local communities and canvas the globe with productive hyper-localised communities.
By 2030, global real estate giant Jones Lang Lasalle (JLL) has estimated 30% of all office spaces will be consumed flexibly.
“At the moment, the take up rate in Malaysia is just at 1% while the Asian average is at 3%, which means we still have a long way to go and the market is wide open. Our estimate is that the Malaysian market alone will grow to RM3 billion by then,” Stephanie said.
The important thing is to grow sustainably to ensure a long mileage in this business and be around to take advantage of the opportunities. That is why WORQ’s profitability is important, which instils the much-needed confidence to our investors.
On her predictions for the coworking industry moving forward, Stephanie said, “Even though some trying news has come out of this market, it is quite normal for a brand new, blue ocean industry to attract many players who will try their best to grow into the new demand.”
“Along the way, some will succeed, some will fail, and in the end, the market will grow towards an equilibrium where finally a workable formula is found for the betterment of the end users.”
She foresees that coworking and flexible offices as a trend will continue to grow and take up the market share of how real estate will be used, and I believe that WORQ is well-positioned to take advantage of each opportunity.