WeWork Impacts India Coworking?

WeWork & its flopped IPO has been the talk of coworking spaces globally. If you haven’t seen the headlines first read our article published at the end of August 2109, which is, funnily enough, title “Post WeWork IPO.” 

Hope that was a good read. And if you’ve read up on this, we hope you appreciate our take on the importance of the ‘cool’ factor the coworking industry.  

Now what’s happened since then to WeWork (aka The We Company)? 

Well… long story short, investors started valuing the firm as a real estate company and no longer as a tech firm and thus the IPO didn’t happen. To put numbers to it, earlier this year WeWork was hoping for a plus $100B valuation (per the graphic here, some bankers had it potentially valued there in 2019 alone!) to where it stands closer to $15B & some say as low as $10B… craziness! Utter craziness.  We’re not here to analyze the company, talk about how nuts the CEO was, dive into the valuation, or explain how Softbank propped up the valuation far beyond what it should have been…. the take away for WeWork & for coworking spaces in Mumbai and for the rest of India (& beyond), is that coworking will likely not have access to the flood gates of capital that injected the space over the last few years. Let’s dive into how this impacts India in a bit more detail. 

Having said that, what has this capital allowed for coworking spaces in India?

1.Ability to grow dramatically, where there are well over a dozen coworking spaces with over 20+ coworking space locations across India (in fact there are some with about a dozen locations in Mumbai alone!); let alone, countless others with five to ten spaces. 

2.To not have to worry about profitability. For instance, one of India’s local heavy hitters, AWFIS, rents flexible seats out at as low as 5,000 rupees per month. Their goal is to make sure all space is used, but to ensure that when they go to their investors and talk about occupancy rate (and not necessarily profitability) to raise more money then to expand even more. This will likely change now post the WeWork IPO Debacle where the conversation will not be more heavily weighted on profitability than ever before. 

With likely a capital infusion slow down, if not a complete halt from VCs and other investors into the coworking space in India – what will happen? 

We will see those coworking spaces that were playing the WeWork model of burning cash for growth come under serious pressure as well and eventually shut down locations, by having to increase prices that will result in users of such co-working spaces to leave to other coworking spaces or back to the coffee shop from which they came or to traditional office spaces, also an option.  

Does this mean the beginning of the end for coworking office spaces in Mumbai?

In our view: absolutely not. First off, users love using coworking spaces and its been a tremendous option especially for freelancers and for smaller firms or even larger firms that want flexibility and don’t want to deal with fit-outs for a period of time. 

Secondly, many of the Mumbai coworking spaces are profitable as they are (now this could change over time for various reasons) so see no reason for this to change anytime soon.

As of this writing from Jagha’s 100+ coworking tie-ups, we haven’t come across any on the ground impact at any of the coworking spaces as of yet. Let’s see how this all pans out for WeWork and the various large coworking space providers in India will be interesting – stayed tuned here from team Jagaha.com for the same. 

If looking for either coworking space or your own office space for rent in Mumbai, just click any of the backlinks in this article and let the search begin for your perfect jagaha!

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