In the tough market of co-working spaces, WORQ believes it has what it takes
By Kiran Kaur Sidhu September 25, 2020
- Its products work in quiet but strategic locations, confident to build new spaces
- Aims to help firms save costs, reduce risk and offer on-demand flexible office usage
Over the past year, the business of co-working spaces has earned a bad rap due to the large scale debacle of American co-working operator, WeWork. But in Malaysia, local player WORQ’s recent funding round of US$2.4 million (RM10 million) from seven follow-on investors shows that not all investors are negative on the co-working model and indicates potential in a post-Covid 19 world.
“Fundraising amid the pandemic is a strenuous challenge to businesses and MDEC is exceptionally proud of WORQ for this remarkable feat. As one of the 7 certified Malaysia Digital Hubs (MDH), WORQ has proven its mettle as a formidable startup community builder through their collaborative programmes and providing a fertile ground for tech companies to spur digital innovation. MDEC will continue to render full support towards WORQ’s involvement in fortifying Malaysia’s startup ecosystem with sustainable interventions,” declared Gopi Ganesalingam, VP of MDEC’s Global Growth Acceleration Division.
Just two months after its inception in 2017 in TTDI Glo Damansara, a mall in Selangor, WORQ turned a profit. In the two years since its last funding round, its revenue has grown 560% and its footprint sevenfold through acquisition of an even bigger space in TTDI (28,000 sqft) while opening two outlets, one in Subang (24,000 sqft) and one in KL Gateway (17,000 sqft).
In addition to the funds raised through investors, WORQ also secured a loan of RM3.2 million from Affin Bank and RM500,000 from another bank. With this healthy sum of funds in its coffers, the company’s five year plan is to grow tenfold to one million square feet.
The co-founders of WORQ, chief executive officer, Stephanie Ping and chief financial officer, Andrew Yeow, have strong confidence in the market and more so in their business model. With total capacity of 1,400 members and an average of 83% occupancy, the company divulges what exactly sets it apart.
Of their immediate growth plans, Ping said: “We’re looking to double our space under management from 100,000 square feet to 200,000 square feet within a span of 1.5 years. With that being said, we expect to open 4 to 5 new outlets in the coming 1.5 years, depending on the sizes of each outlet.”
Different business model for long term growth
“From very early on, we took up a different model of doing this business,” said Ping. One factor that is key in WORQ’s success is its choice to set up shop in prime locations with low foot traffic. WORQ’s approach was to ensure its formula works well before scaling up. “WORQ is basically a real estate innovation company, more so than just a co-working space. We plan to grow both organically and through acquisitions. We had already acquired one flexible office space into our portfolio for this year and with our formula, we are confident that more can be added to our portfolio with success.”
Despite challenges posed by the Covid-19 pandemic, it also presents great opportunity on the flipside. “Covid had slowed down a few deals that were in progress pre-MCO and a fair amount of startups and SMEs had required to downsize their teams, but since the economy re-opened, we have seen a resurgence of new deals. These customers take a longer gestation period for closing as many are larger companies and require several levels of approvals,” she shared.
Amidst concerns in the current economy, WORQ aims to help companies save costs, reduce risk and offer on-demand flexible office usage. “We predict that real-estate will be consumed on a buy-as-you-need basis. If companies need a bite-sized space one desk at a time, they should have access to it. Companies will find that this is a lot less risky – they don’t have to tie themselves down to a tenancy agreement and renovate. They can easily scale their team sizes,” said Ping.
Following this model, employees of a company can check in to WORQ to use the space for the length of time required and the company is charged for that portion of usage. “For WORQ, this means we can save cost for people, sell the seat multiple times and increase our profitability. It is a workable formula for all three parties.”
On top of careful due diligence in understanding the potential of filling up a target location, WORQ also strictly abides by its cost base to ensure profitability can be reached. “This would be the same for any business, but we are certain to also balance the idea of profitability and being able to provide a great customer experience. We are not just in the business of selling a space to work, but instead to focus on bringing in a community that will bring value to businesses.”
Will WORQ win the community-building race?
The company’s mission statement is to make people prosper by working together. It is not uncommon for co-working spaces to tout community as a selling point. Similarly, this is also where WORQ believes it offers value as a flexible office operator. Yeow shared: “In office spaces, traditional landlords have a very utility-oriented mindset. They build and focus on infrastructure within the space. But we come in as a service provider and focus on the worker’s experience in the space,” he explains.
The company is in the midst of beta-testing for its proprietary app, SPARQ, a virtual community network that sits on top of real-estate offering. The app which is set to be released in first quarter of 2021 allows users to ask queries in a forum and receive help from fellow community members. “Through the app, the online-offline connection keeps happening and it is one of the ways we are innovating the market as well,” shared Ping.
Inserting the service layer into an infrastructure-based business is where innovative opportunity lies. For WORQ, its primary focus is not how cheap rent or setup of the space. “We think about what workers need to be productive in their work. That comes in through the physical space and through the content we bring to the community.”
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