"WeWork's late IPO and the COVID-19 pandemic have definitely made it a little harder to raise funds than in previous rounds," WORQ CEO and Co-Founder Stephanie Ping told Vulcan Post.
“In this environment, investors are much more demanding and demand solid figures and carry out strict due diligence for our business model. In the past, they followed a major investor's decision, but no more. "
To what does she attribute the success of the WORQ financing round announced today in the amount of RM 10 million?
Stephanie replied that it boiled down to 4 things:
- The solid finances and profitability of WORQ
- Its sustainable business model with controlled risk,
- The huge market of RM 4.4 billion in Malaysia alone,
- And a formula for the coworking space market that finally works.
The coworking space brand has been profitable since it was founded in March 2017. The branches take an average of 3 months to reach their full capacity.
In the last 2 years since its last donation round, WORQ has increased its presence 7 times and its sales by 560%.
A goal of 1 million square feet in 5 years
The funding of 10 million RM comes from 7 follow-up investors, including the regional investment group Phillip Capital.
WORQ has also received loan offers from 6 banks including Affin and will use the funds to increase its managed space by 100% and meet its goal of 1 million square feet in 5 years.
It does this by adding locations and expanding the current branches, as well as acquiring other loss-making space that will require a portfolio shift.
WORQ's newest location in KL Gateway, Bangsar South, which opened in August 2019 / Image Credit: WORQ
“Landlords are seeing a decline in rental yields and an oversupply on the property market. We want to work with them to revitalize their spaces and introduce them to an innovative mindset, ”said Stephanie.
WORQ has also expanded its services to include WORQ Enterprise, a space-on-demand department dedicated to advising and adapting workspaces for companies.
"This enables WORQ to provide extreme flexibility and end-to-end real estate solutions such as business continuity planning, a disaster relief solution that puts a company on standby in the event of unforeseen circumstances," said Stephanie.
15% more members despite the pandemic
During the MCO, WORQ has seen membership growth of 15% since February 2020.
To add further value to 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 fill the globe with productive hyperlocalized communities.
By 2030, global real estate giant Jones Lang Lasalle (JLL) has estimated that 30% of all office space will be used flexibly.
“Currently, acceptance in Malaysia is only 1%, while the Asian average is 3%. That means that we still have a long way to go and the market is wide open. We estimate that the Malaysian market alone will grow to 3 billion RM by then, ”said Stephanie.
The most important thing is to grow sustainably in order to guarantee a long mileage in this business and to seize the opportunities. This is why WORQ's profitability is important, which gives our investors the much needed confidence.
Commenting on her predictions for the future coworking industry, Stephanie said, “While some difficult news has emerged from this market, it is quite normal for a brand new Blue Ocean industry to attract a lot of players who are doing their best to accommodate the new demand. "
"Along the way, some will succeed, others will fail, and in the end the market will grow towards an equilibrium where a workable formula is finally found to improve end-users."
She anticipates that coworking and flexible offices will continue to grow as a trend and take the market share in real estate use, and I believe WORQ is well positioned to seize any opportunity.
- You can find out more about WORQ here.
- You can read our previous coverage of WORQ here.
Featured Image Source: Stephanie Ping, CEO and Co-Founder, and Andrew Yeow, CFO and Co-Founder of WORQ