Is co-working the future of start-ups? As the startup ecosystem gains momentum and with startups mushrooming in virtually all domain, except the virtual economy, there has been an influx of coworking spaces that have adapted all too well with the environment. People prefer these spaces over an exclusive office because of
1. Low rental costs
2. Flexible work hours
3. A meeting place of people with varied qualifications that are mapped to matching requirements
A paradigm shift is underway in people’s lifestyle in the way people live and work and accordingly, a mundane traditional office could be transformed into a creative coworking office space. These sorts of workplaces aid in developing a burgeoning networked community, a network of quality contacts helpful for budding entrepreneurs.
Based on a report, in the first quarter of 2018 leased coworking spaces significantly rose to 19 lakh sqft from 6.4 lakh sqft in the previous year. No later than 2020, the projected area of coworking spaces would be about 5-10 million sqft, particularly in tier-1 and tier-2 towns.
The basic requirements or facilities that people seek from coworking spaces are as follows:Flexy Sitting
1. high-speed Internet
2. Conference Room
3. Staffed Reception
4. Flexible Plans
5. Coffee and Snacks
7. Fun events
These startups typically have a quite simple revenue model. Their earnings are either through subscription fees or by levying charges based on time. The rates vary depending on the amenities provided and the location of the office. Usually, coworking spaces are the meeting places or where entrepreneurs, independent professionals or freelancers including writers, app developers, and so on get to interact with each other.
Presently, the double-digit growth trend of office spaces is a reflection of the soaring demand which has been fulfilled by coworking spaces that are proving to be an effective solution. Shared workspaces are available on-demand and the demand is increasing exponentially as tech as well as internet-based startups mushroom in all the major metropolises of the world.
Is co-working the future of start-ups?
Amongst the coworking spaces, the two of the biggest and indigenous coworking spaces are Awfis and 91Springboard. Both in terms of revenue and office space, they have had a phenomenal growth rate. In FY 2017, Awfis’s growth rate rose to around 1600% while revenues increased from 1-1.5 Crores to 18-19 Crores. During the same period, 91Springboard grew at a rate of 1300%, while there was an increase in revenues of 19-20 Crore from 1.5Cr in the previous fiscal.
Forecasts are rife that these figures would triple in the latter part of 2020. The reasons behind this upward trend in revenues and coworking spaces are corresponding increases in office maintenance costs, scaling the startups and a corresponding increase of these office spaces.
This industry’s potential is measured by its capacity utilization of seat or seat allocation. Accordingly, if a consumer chart is drawn totaling 15Mn seats, for example, then approximately 10Mn seats would be utilized by big corporates, Another 2Mn would be utilized by SMEs and yet another 2mn for Freelancers and the remaining for startups.
The perspective of the Future
This industry has, indeed, grabbed the attention of investors which is evidenced by the fact that foreign conglomerates like Wework are spreading their footprint on foreign soil, the reason being, they are targeting the youth who are opting and indeed pursuing entrepreneurship as their career goal. Spreading their tentacles into tier-2 and tier-3 townships would be of utmost importance, as these tier 2 and tier 3 townships are gradually transforming into startup hubs.
A combination of coworking spaces and startups in incubation centers would be the upcoming grand plan, where people can locate colleagues, investors willing and likely to invest in projects if they think the investment is lucrative and feasible and a conducive environment, all under one roof. These days, a coworking space is either leased or in all likelihood opens its doors in a café. Therefore, with aggressive marketing of these coworking spaces and if the price is increasingly affordable then people might believe that they are getting the bang for the buck then in all likelihood they would gravitate towards opt for these swanky workplaces. The valuation of this workspace sector is approximately $1 Billion, which might increase to $ 7-8 Billion in the next two to three years.
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