CoHive CEO: We are The Toyota of Co-Working Space, High-Quality but Affordable
16 July 2019
Indonesia-based coworking space CoHive recently made headlines when it secured $13.5 million in the first phase of its series B funding round, led by Stonebridge Ventures. Kolon Investment, Stassets Investment, local property developers and existing investors including H&CK Partners also participated in the round.
The startup (that was earlier called EV Hive) expects to raise a total of $20 million this year. It is one of the oldest players in the coworking business in Indonesia, having been in the market since 2015. Backed by early-stage venture capital firm East Ventures, EV Hive was re-branded as CoHive in 2017.
“We [are] currently in talks with several investors, and we possibly can secure more than $20 million of series B targets in a few months,” CoHive CEO Jason Lee told DealStreetAsia in an interview. He added that while the company needs another $6.5 million to achieve the target, it may also garner more than $20 million.
“Some of the investors already committed and we are waiting to launch more new products and services, especially CoLiving. So, we just decided we wanted to announce the first closing. It would happen this year in the next few months,” said Jason.
In the past few years, the thriving startups’ ecosystem in Indonesia has been prompting the establishment of a number of coworking spaces in the archipelago, disrupting the traditional office building space and rigid working environment.
According to research by real estate consulting firm JLL, around 55 per cent of leases were signed by tech companies in Jakarta in the first quarter this year, in which three brands dominated the office space industry, namely CoHive (26 per cent), WeWork (14 per cent), and GoWork (10 per cent).
The remaining figure was dominated by smaller players such as Kolega, UnionSpace, Marquee, CEO Suite, and others.
According to Coworking Indonesia data, a coworking space operators association, there is at least 250 coworking space in the country, with 20 per cent of the figure being located in Jakarta. That number grew almost six times from 45 coworking spaces in 2016.
The industry has attracted both local and foreign coworking startups in the market.
CoHive unveiled a bouquet of new products last month, namely CoLiving (living spaces), CoRetail (new retail), and CoHive Event Space (events).
Rebranding; adding CoLiving
“When people think of EV Hive, they always think of us only as [one of] East Ventures’ portfolio companies, and we only do coworking space. So we’ve expanded and decided we’re not only can do coworking spaces but we now also offer other products,” said Jason.
CoHive will allocate its fundraising proceeds to develop CoLiving, and expand more into the many areas in Jakarta. It has been in talks with several property developers, including real estate developer Sinar Mas.
“We first thought about CoLiving when we started two years ago. Basically, it was when our first members started moving into our coworking spaces. The first question they always asked us was, “do you have any place nearby, for myself or my team to live at?” That was actually how the idea of CoLiving came about,” Jason said.
“We already see this concept of CoLiving take off in other countries. In Singapore and in any other countries. In Indonesia, the market is even bigger. Because the startup ecosystem is so much larger here, the population in Indonesia is also very young,” he said.
The first CoLiving property, which launched in May this year, is located in West Jakarta area. Currently, CoHive has 27 CoLiving members, where some of them are CoHive coworking members. Then, in the second phase, CoHive will operate 37 units in the same building.
“We are planning to launch the second phase of Co Living in September this year. Around 50 per cent is already booked,” he added.
Jason said CoHive now operates in 31 locations across the archipelago and is currently looking to open another nine centres by the end of this year, taking the total number of coworking spaces to 40.
“We are building coworking space nearby our West Jakarta’s CoLiving location. It will be like a two to three-minute walk. We will launch sometime in the fourth quarter this year between September, October, or November,” he said.
“The great thing about CoRetail is this is also a member driven. When we talk with our members, we realized many of them said the hardest part of doing business was setting up a store. And the reason for that is because they want to set up a store at a mall, which the lease can be three to five years and it has a very high rental. It is very expensive for startups,” Jason said.
Jason said it is very hard for startups to set up a new cafe or stores as they need to pay a lot of money upfront for 12 to 24 months, and they still do not know whether the business could work.
“We had launched the first phase of CoRetail, located at CoHive building in Mega Kuningan (South Jakarta area). We have partnered with Bukalapak for Bukakiosk (a kiosk partnered with Bukalapak), also Fore Coffee (East Ventures-backed coffee chain, and Go Food Festival (partnered with GOJEK),” he added.
He said in the near future the company will create pop-up stores and Instagram boxes, which partners with instagram retail sellers or entrepreneurs.
Indonesia, a country with a relatively young population and a growing number of tech entrepreneurs, has captivated many coworking space operators.
The data showed that Indonesia has 63.4 million millennials, that belong to the age group of 20-35 years. Urbanization also contributes a lot to the booming trend as more and more people are moving from rural areas to the city.
Jason said when CoHive first started in 2015, the number of the overall office space market is only 2 per cent, but in 2018, the figure has grown to 4 per cent.
“That number still super small compared to the potential in other countries. For example, New York, which has 10 per cent of leasing volume only in the first half of 2018. So, we see the entire pie is getting bigger. That’s where the collaboration of all players to educate the market is really important,” he said.
Jason, however, says that what CoHive does is different from big names like WeWork or GoWork.
“We’d like to say, that WeWork is like the Mercedes. It’s more expensive [than CoHive]. And we’re not saying it’s a bad product. Yeah, it’s a beautiful space. Some of the desks are even made out of teakwood. But, what we’re trying to do is different. So we’re trying to be like a Toyota for the market. We create a high-quality product with an affordable price that provides a lot of value for our members,” Jason added.
The majority of young entrepreneurs in Jakarta are fully aware of the coworking concept, especially with some of the brands operating in the country. But people in the second to third-tier cities of Indonesia are still oblivious with some of the coworking brands, including CoHive.
“When we first opened new locations, outside Jakarta, it’s still a very new product and we’re not very well known. People don’t know what coworking is, so they also won’t be familiar with CoHive. At that point, we’re not like McDonald’s, where you put the logo and everyone knows what the product is,” Jason said.
Jason said when they entered a new market in a city of Surabaya (East Java region), the company was holding a lot of events and activities in an effort to build brand awareness of what coworking space is.
“We are aiming to be profitable in the next one, three years. Many of our locations are already profitable. But the newer locations, they typically take about six to nine months. When it opens, it opens from scratch, which takes time to build awareness, and people to move into space,” Jason said.
Tier II focus
CoHive – when it used to be EV Hive – was planning to expand into the overseas market. However, the company stalled the idea after the result of a brief survey that was distributed to its EV Hive members.
“When we [EV Hive] did our fundraising from SoftBank, our plan was to go to expand overseas. But what we did was we handed surveys to our members and we asked them, “where do you want to expand your business?” And we listed Singapore, Thailand, Vietnam, and Cambodia. And we also listed out the other cities in Indonesia,” said Jason.
Now, CoHive is looking to launch centers in the cities of Makassar, Surabaya, and Bandung this year.
“The interesting thing is, over 90 per cent of our members chose Indonesian cities over international locations. So, everything we do, we’re doing it for our members to help their business. After we got the feedback, then we started focusing more on the second-tier cities outside of Jakarta,” he said. “From their [CoHive members] perspective, their product already works in Indonesia, because the language is the same. The culture is the same and they understand Indonesian consumers, and they prefer to expand to other cities and regions.”
Source: Dealstreet Asia