Globally, today co-working space industry is widely hailed as one of the most exciting and innovative industries of the modern economy. The most exciting thing about co-working industry is obviously how it is going about revolutionizing our traditional workplaces. If the co-working companies have their way then soon terms like ‘workplace boredom’ and ‘Monday blues’ may become obsolete jargons.
Back in India, the co-working industry is steadily gathering pace and in the midst of this growing competition the one player that has emerged as a poster boy of this industry is Awfis. Founded in 2015, Awfis in a very short span of time has emerged as India’s largest co-working startup. The company’s expansion journey from operating only 5,800 desks across 20 centres in July 2017 to 30,000 seats across 63 centres in 9 cities now is a clear sign of its stupendous success and bright prospects.
Awfis also boasts a very healthy balance sheet, with the company consistently managing to double its revenue on year-on-year basis. Not to mention that the company has already achieved the important milestone of ‘becoming profitable’ within few years of its operation.
With such strong growth credentials, investors are unsurprisingly going full throttle to repose their faith on this young company. The company has so far raised $81 Mn from several high profile investors, with the recent series D round fetching nearly $30 Mn.
Techpluto caught up with Mr. Amit Ramani, CEO & Founder, Awfis in an exclusive interview. In this special interview, Amit Ramani has shed light on Awfis’ latest funding, future growth prospects and other important aspects with regards to the overall co-working industry.
Firstly, we’d like to offer our heartiest congratulation to Awfis for latest fundraising round of $30 Mn? Can you please enlighten how does the company plans to utilize this latest capital infusion?
Till date, Awfis has received $81 mn funding in total and we intend to utilize the latest funding for fueling further expansion. This is will enable us to sustain our leadership position in the coworking industry. We are looking at expanding our network to 400 centers and 2,00,000 seats over the next 36 months, by deepening our presence in existing markets & foraying into new micro markets in India. Additionally, the funds will be deployed to introduce innovative products/services backed by new-age technology to enhance customer experience. We will also put further impetus on our B2B offerings such as Awfis Enterprise Solutions (AES) as well as Mobility Solutions to meet the needs of the growing corporate India.
What, according to you, are the key factors that is pushing large corporates and MNCs towards co-working space?
Globally, Corporates have adopted flexible workspace as core part of their real estate strategy. In India coworking has seen a very strong uptick from Corporates and SME’s owing to the ease of doing business in flexible workspaces. As a result, the coworking segment has seen 25% share of the new leasing activity in 2018. The trend will continue in 2019 as the mindset shifts for flexible workspaces becoming a core part of the real estate for all enterprises. It has become a core part of the corporate economy due to the multiple benefits of hassle free ready to use spaces with complete flexibility and significantly higher design quotient. It also fosters shared economy i.e. sharing common resources on the open floor which in turn aids in reducing fixed costs of the businesses which consists of start-ups, freelancers, large corporates, MNCs etc. Indian coworking sector is treading on the path to become one of the top three markets in the world (Source: Colliers).
To cater to the specific requirements of large corporates/MNCs & SMEs, Awfis has expanded its portfolio and launched Awfis Enterprise Solutions (AES), a hassle-free way of setting up, designing, building and managing one’s ‘own’ office space. Several SMEs and corporates are utilizing this model and setting up primary, satellite offices under this business model.
Currently at Awfis, we are servicing over 25,000 working professionals across 1500+ companies ranging from renowned clients such as Syngenta, Dun & Bradstreet, Duff & Phelps, Hinduja Global Services, Vodafone, Reliance, Hitachi, Blazeclan, Zomato, Practo etc. With a network of 30,000 seats across 9 cities with 63 centers, Awfis’ clientele ranges from 40% SMEs and corporates each and 20% of startups and freelancers.
But ideally startups and SMEs share closer affiliation with co-working space due to affordability quotient. How critical has been the role of startups and SMEs in contributing to Awfis’ overall growth?
The rise of coworking spaces was supported by the growth of start-ups and freelancers & due to the unconventional benefits that it offered to them, such as – flexibility, affordability, infrastructure & a community of like-minded individuals. SMEs and startups are on the lookout for Grade A workspaces at affordable prices.
Coworking spaces have not only disrupted the commercial real estate segment but also transformed the way businesses function by providing transparent workspace solutions that suit all segments – Corporates, SMEs & start-ups alike. SMEs, who now form a significant portion of shared workspaces client portfolio, are embracing them due to cost efficiency, technological advancements, superior infrastructure, enhanced productivity, easy operations and networking opportunities available. Awfis’ total customer base consists of 40% SMEs and 20%startups.
According to a recent report by JLL, the potential market size of coworking across India is expected to be 13.5 million users by 2020 with 10.3 mn seats occupied by enterprises. Freelancers and SMEs will make up for 1.5 million users and start-ups will demand 100,000 seats by 2020. While affordability is a key factor-influencing shared workspaces, the collaboration opportunities and potential clientele makes them a conventional choice for SMEs and startups alike. Coworking spaces are an ideal environment for any organization which enables them to focus solely on their business while other variables are taken care by the coworking space provider.
Earlier this year, Awfis opened its largest centre in Bengaluru. Can you please shed more light on this ambitious move?
Awfis has been spearheading the coworking segment successfully since the past 4 years and recently opened a 63000 sq. ft. workspace at Residency Road, first of its largest center in Bangalore & in India. It is strategically located amidst a clutch of bustling areas such as UB City, Brigade Road, MG Road and Church Street and leading hospitality centers such as ITC Gardenia, Ritz Carlton, and The Gateway.
As compared to Awfis’ other centers, the residency road center is one of its kind. It has received immense success with 80% occupancy in the pre-launch sale & 95% occupancy rate within 3 months of its launch with clients like Reliance Communications, Frontizo Business Services, Equal Experts & The Math Company. The success of this center has given us the confidence to replicate it across other markets and micro-markets.
Providing best in class services across 11 centers in Bangalore, this center with 1050 workstations also flaunts a sprawling food court on the terrace with a capacity to accommodate over 350 clients. Awfis has completely revamped the building & transformed it completely to not only provide Grade A infrastructure that meets the exemplary standards of its other centres but also takes design, aesthetics and functionality one notch higher.
This year has proven to be really great for Awfis as it finally turned profitable. What were some of the key decisions & strategies that eventually helped the company to achieve profitability within the short span of three years?
We are extremely happy with the community feedback we have received so far and our deep-rooted customer understanding along with customer centricity that has helped us with the unprecedented growth. We are cognizant of the ever evolving needs of the Indian consumer along with retaining the essence of the brand. Additionally, affordability is our key differentiator that has made us a primary choice amongst the Indian workforce.
At Awfis, we leverage Managed Aggregation Model (MAM) where Awfis ties up with landlords of underutilized commercial spaces and shares the revenue with landowner. The capital efficiency of MAM is a key differentiator that has aided our success. With MAM, in the amount of capital which another player would spend to set up 1 seat, we are able to set up 4 to 5 seats. Currently, 70% of seats are under ‘managed aggregation’ model and Awfis intends to increase this to 80% in the next 10-12 months. These are some of the aspects that have helped Awfis to fortify its position as the industry leader.
What are some of the key transformations and trends that are currently sweeping across India’s co-working industry?
The coworking space has emerged, as a disruptor is no secret with the commercial real estate market offering lucrative options for both buyers and investors alike. Coworking spaces have completely changed the definition of a workspace by revolutionising & challenging the limits of traditional offices. It has helped to break silos and move away from the closed doors & cubicle culture to an open floor with everyone working together.
Coworking is rapidly transforming into a mainstream segment, owing to the evolving role of technology and millennials forming an integral part of the workforce in India. This surge in demand is only slated to grow with over 13 million people expected to work out of coworking centres by 2020 in India (Source: CBRE). The market is slated to witness phenomenal growth in the Tier II markets as well owing to the increase in demand from large corporates, SMEs and startups due to increased need to enter newer markets and reach their target audience, thereby furthering the Indian coworking landscape.
Additionally, more and more corporates are opting for coworking players as a one-stop-solution for setting up their independent offices. Awfis has expanded its portfolio and is providing B2B solutions i.e. Awfis Enterprise Solutions (AES) and manages designing, building and managing office spaces (satellite offices/head offices) for big enterprises, MNCs and SMEs. Some of its clients include Syngenta, Dun & Bradstreet, Duff & Phelps, HGS, Vodafone, Blazeclan etc.
Tell us about how Awfis goes about ensuring that employees are able to strike that elusive work-life balance and make work more fun & enjoyable?
Awfis is currently India’s largest coworking player with 63 centres spread across nine cities in the country. We have emerged as India’s largest and fastest growing workspace-as-a-service (WAAS) company with a vision of serving shared communities and delivering exceptional experiences. Work-life balance is championed at Awfis through exclusive events and activities, opportunities within the community to interact, collaborate and do business within.
Awfis curates 1000+ exclusive events, workshops and experiences every year for its community members. Themed experiences like #Awfis Moments help community members from different organizations with similar interests’ bond with each other over enriching activities. Under its Rewards Program, Awfis has curated 100+ strategic partnerships that provide its community members seamless access to leading service providers & exclusive discounts across health & wellness, retail, restaurants, hotels, cab providers, entertainment etc. making it easier to make the most of being a part of Awfis community.
Where do you see Awfis in the next 2-3 years from now?
We have established a strong presence in the segment and are looking at understanding the ever evolving needs of the Indian consumer so as to incorporate it without losing the essence of the brand. Being cognizant of the upcoming trends and the ever-evolving market needs, we are providing innovative products and solutions to community members.
As mentioned before, we have recently introduced “Awfis Enterprise Solutions (AES)” to offer end-to-end hassle-free workplace solutions to SMEs & Corporates. We intend to foray into our B2B venture to broaden our reach in the segment. Additionally, we have witnessed a strong entrepreneurial spirit in tier 2 cities of India and are foraying into these untapped markets. We launched a center in Chandigarh last year and intend to expand to cities such as Jaipur, Ahmedabad, Bhubaneshwar, Kochi, and Indore by 2020. Awfis is currently rapidly expanding across key metros & Tier-II cities and intends to double its seat capacity & centre network y-o-y. With continued momentum we expect to reach 2, 00,000 seats in the next 36 months.
What you make of Oyo’s recent entry into the co-working space and WeWork’s rapid expansion across the Indian market. Do you think this will only further intensify the competition in the co-working industry?
We are aware of the competition in the industry; however, we have successfully created market leadership in the segment and continue to fortify the same with our unique offerings, vibrant workspaces at affordable price points. Currently, we have the largest network with 63 centres across 9 cities pan India.
We believe in being workspace partners for our clients and not mere service providers. We have successfully established an extremely strong foothold in the rapidly evolving coworking sector owing to our understanding of the micro markets & the overall Indian CRE business ecosystem. A home grown brand, at Awfis, we understand the challenges of Indian customers and have created customized solutions catering to different workspace requirements.
From supply perspective, we have been able to successfully identify underutilized assets, collaborate with landowners and deliver Grade A workspaces in a value driven manner which translates into better economics for both us and our various stakeholders. We have efficiently deployed our resources to meet our business requirements without hampering the quality of workspaces provided. This sets us apart from our competition, giving us a leverage over other players in the Indian Coworking market.
Any foreseeable challenges that you feel the co-working industry may have to face in the coming years?
The shared workspace segment is slated to grow with over 13 million people expected to work out of coworking centers by 2020 in India (Source: CBRE). So far, more and more companies are choosing Awfis as a workplace partner, however, we are cognizant that there is a significant chunk of companies who are still not ready to make the switch, with data security and breach on top of their concern list.
Despite Awfis’ sophisticated and strict protocols with regards to the same, it remains more of a mental obstacle for corporates. Additionally, although there is immense underlying real estate space available in the country, while landlords are hesitant in partnering with coworking players. One of the primary risks cited for all coworking players including the large global players is that the rental commitment to space owner are long term while the clients are short to medium terms.
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