Short of cash, startups begin sharing space; embrace co-working
When Anand Satyan of e-commerce logistics firm DeliverWithMe wanted help in developing content to boost his company’s online profile, he only had to look as far as the next desk.
BANGALORE: When Anand Satyan of e-commerce logistics firm DeliverWithMe wanted help in developing content to boost his company's online profile, he only had to look as far as the next desk. For, seated next to him at office was another entrepreneur running his own educational content-sharing platform. It is the availability of such critical contacts and the need to cut costs that is pushing more and more newly minted companies to opt for co-working, where people not belonging to the same organisation share a physical office space.
DeliverWithMe's Satyan, 25, and 35 other entrepreneurs and freelancers work out of The Playce, which was launched in November 2012 for startups. Situated in Mumbai's Mulund, The Playce charges Rs 5,500 per seat. "The affordable space and amenities are, of course, a major plus," said Satyan.
"More important is the community of entrepreneurs we get access to," said Satyan, who founded his venture around five months ago. "During my interactions with other entrepreneurs I get ideas, feedback and help." Co-working as a concept has been picking up in India over the past couple of years, especially in startup hubs such as Bangalore, Delhi-NCR and Mumbai. Globally, the co-working movement took off when Brad Neuberg, a San Francisco-based software engineer, opened the first communal workspace in 2005.
Indian entrepreneurs now have an option to choose from a variety of such facilities across the country, including 91Springboard, Jaaga, Moonlighting, SutraHR Co-working and Coworkindia. While Jaaga in Bangalore offers co-working space for as low as Rs 500 per seat a month, in Mumbai and Delhi the rental can go up to Rs 7,000. The cost advantage offered by co-working spaces is a huge draw for many entrepreneurs.
Many of them estimate that for a team of two-four members, taking an office on rent accounts for about 15% of their cost, compared with 5-10% for co-working. This does not include the time spent on setting up the facilities. Ankur Agarwal, founder of Delhi-based experiential travel venture Acamor, had tried everything from a residential flat to a business centre before he relocated to 91Springboard, a 10,000 square feet space about 8 km from Delhi's landmark Nehru Place.
"A flat far away from the city may be cheaper, but I cannot meet clients there and I have to take care of everything from electricity to maintenance," said Agarwal, 32. "A business centre is extremely expensive and (would) cost us about 40% more than what we pay at 91Springboard."
Launched by six entrepreneurs this January, 91Springboard is an incubator and co-working space. The centre, which is structured as a for-profit private limited company, also takes an equity stake of up to 15% in an incubatee, while a startup availing of just co-working facilities has to pay a rental of between Rs 3,999 and Rs 6,999. Most other facilities, including business centres, cannot match the buzz of a co-working space. "The other day, I got client leads during a casual conversation with a couple of other entrepreneurs," says Acamor's Agarwal.
Co-working also makes it easier to have startup events. For instance, later this month, 91Springboard is hosting Dave McClure from the renowned US accelerator 500 Startups. And Moonlighting, a community-run centre in Delhi's Greater Kailash-I, offers accommodation as well at an additional cost — from Rs 750 per day.
"There is a hope that the collision of ideas and people at such spaces will lead to something that is greater than the sum of its parts," says Sanjay Anandaram, venture partner with Seed Fund, who has been associated with international co-working network and incubator The Hub. Even those entrepreneurs who have moved to their own offices remember the experience at a co-working site fondly. Ramprasad Rajendran, 28, of social gaming venture HashCube worked for a year out of Bangalore's Jaaga up to late-2010. The company has since moved to an independent office and raised an undisclosed amount of funding from the Indian Angel Network.
"The access to startup events and other interesting entrepreneurs made us better entrepreneurs and our company a better venture," says Rajendran. Anandaram says the risk at such co-working spaces is that an entrepreneur will be bombarded with ideas and suggestions, all of which will sound good. "He needs to be sure that he will be able to pick the suggestions that are right for his venture."