Why Co-Working 'Works' for Start-Ups

Some entrepreneurs spend as much as 35 per cent of seed capital in security deposits to landlord, fees to the architect and building office. With co-working spaces, one just needs to plug and play
Why Co-Working 'Works' for Start-Ups
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Features Writer
3 min read
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Sharing working space, or co-working, has attracted the attention of not only small start-ups or MSMEs, but also of large corporations as it is a cost-effective alternative to building or hiring an office. At a time when shared economy looks like to be the future, co-working spaces make sense.

While speaking to Entrepreneur India during the Startup Summit 2019 organised by Franchise India, OYO-owned Innov8 founder and CEO, Dr Ritesh Malik, said, “Co-working had made the most amazing impact on start-ups. In my first start-up, I spent 35 per cent of my seed capital in security deposit to landlord, fees to the architect and building my office. With co-working spaces, you need to just plug and play.”

Growth of Co-working Spaces In India

According to a June 2019 report by JLL and FICCI, the co-working market share in office leasing in the top seven cities of India increased from 8 per cent in 2018 to 12 per cent in Q1 2019.  The report also states that Mumbai had the highest proportion, 14 per cent, of co-working space to total office leasing in 2018.

Not only small-sized companies but corporations such as Paytm, Zomato, Microsoft and Twitter are also availing co-working spaces. In January, media reports said that e-commerce giant Flipkart was in talks with five co-working space providers for getting an office space in Bengaluru to accommodate over 3,000 workers.

According to a May 2018 report by JLL India, over 13 million people are expected to work from co-working spaces by 2020. Around 50 per cent of the demand may come from enterprises, freelancers, and small and medium enterprises (SMEs) which are expected to constitute about 1.5 million users, while start-ups may take up to 100,000 seats by 2020.

Benefits of Co-Working Spaces

“Why do we need to give commitment upfront? One can convert all the capital expenditures into operating expenditures. Our focus is that you only focus on your product and do not give capital to furniture which is a depreciating asset,” Malik said.

Apart from the economic benefit, the JLL report states that co-working spaces also help in developing the ‘community’ concept as it allows like-minded people to connect with each other in a professional space.

“We have not even scratched the surface of the co-working industry. We are not even at 1 or 1.2 per cent of their entire office uptake. In my personal guess, this will be at least 90 per cent by 2040 because this makes business sense,” Malik explained.

Be frugal: Innov8 Founders Advises Budding Entrepreneurs

According to Dr Malik, budding entrepreneurs looking to start up in the co-working segment should be frugal and avoid spending money unnecessarily. “Be as frugal as possible, be mindful and leverage technology and make sure it makes business sense,” Malik explained.

He also believes that there is no competition in the sector as this space is at a nascent stage and thus every founder and other stakeholders help each other to understand the market better and help it develop.

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