Funds Keep Flowing Into The Indian Co-Living Space
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Among many different disruptive start-up ideas that have propped up on the Indian ecosystem in the last few years, few have made the kind of impact that co-living has. The idea of shared living spaces, unlike office spaces which are a lot more formal, is something that has slowly begun to make its way into the urban headspace.
As with most such disruptive ideas, more and more companies seem to be coming up every day with investors, too, not wanting to miss out on any action. Bengaluru-based Zolostays, backed by venture capital firm Nexus Venture Partners, is in talks with Credit Suisse to raise $100 million, the Press Trust of India reported, citing the company’s chief executive officer.
“We are in talks with Credit Suisse to raise $100 million in Series C round to fund our expansion plans to increase the number of beds to 2 lakh,” CEO Nikhil Sikri told the news wire.
Flux of Funds
The co-living market in India is expected to grow at a compounded annual rate of 17 per cent in the next five years to become a nearly INR 1-trillion market, according a report published by the Federation of Indian Chambers of Commerce and Industry and JLL earlier this year.
Majority of the co-living demand came from millennials migrating from their home cities for work, followed by students, the report said.
This increasing need for affordable living spaces has brought start-ups such as NestAway and CoLive, who—with the help of a slew of funding—have been able to scale up at a staggering pace. In just four years, NestAway has expanded to more than ten cities across the country, including Kota, Mysuru and Chennai.
In September this year, NestAway raised INR 349.2 million in a series D round from Goldman Sachs, according to data provider Crunchbase.
CoLive’s website tells us that it has more than 20,000 beds currently, with 2.5 million square feet under its management.
The growing demand and potential market for co-living has attracted bigger companies into the market, including hospitality unicorn OYO.
With OYO Life, the business segment it launched last year, the Ritesh Agarwal-led start-up is now betting big on the co-living space. Earlier this year, Airbnb said it had invested in OYO’s series E round as part of a strategic investment.
Late last year, hotel chain Lemon Tree and private equity firm Warburg Pincus announced a joint venture to invest $15 billion into the Indian co-living space.
For ZoloStays, addition of the new funds will mean expansion in cities they are already present in, with Nikhil ruling out expanding too much into newer cities or even into the student space.
ZoloStays is currently present in nine cities across the country, and Nikhil said they will limit themselves to these cities as they knew those markets well.