Why Southeast Asia's Startups Are Uniquely Attracted To Coworking Spaces

Particularly in Southeast Asia, there’s been a rapid rise of coworking spaces that have tapped on two qualities unique to the region.


25 Aug, 2017

Why Southeast Asia's Startups Are Uniquely Attracted To Coworking Spaces | BEAMSTART News

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While they may have once been considered a fad, coworking spaces - facilities that provide businesses and individuals with a shared working environment - are proving to be a lasting trend, and demonstrate one of the biggest changes in the work market today.

Particularly in Southeast Asia, there’s been a rapid rise of coworking spaces that have tapped on two qualities unique to the region. First, the startup ecosystem here is younger than the rise of coworking spaces in the U.S., so many of today’s more successful startups in this region started out in a coworking space. Second, the heterogeneous nature of these markets (different countries and different communities) make coworking spaces and the communities around them essential for startups looking to quickly expand internationally and plug into local communities and talent.

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As workers become increasingly mobile, the importance of having a conventional office decreases - and that’s where coworking spaces come in to meet the needs of a new breed of workforce.

Examining coworking in the context of Southeast Asia

The world’s biggest co-working space provider, WeWork, recently acquired Spacemob in Singapore, its first acquisition in Asia and only its second outside the United States, the other was in Israel. This highlights the growing importance of Southeast Asia for the co-working space model on a global scale.

Southeast Asia’s high growth economy has given rise to a growing crowd of consumers, and in turn, startups, businesses, and freelancers in search of affordable workspaces. It’s a plus that coworking spaces like Impact Hub and The Hive offer access to a regional network across cities like Bangkok, Singapore, Manila and Phnom Penh - a critical element in a region (and culture) where personal connections go a long way in streamlining growth processes and business collaborations.

Southeast Asia is also well-suited for distributed teams. For one, the region boasts a diverse talent pool spread out across different countries: Vietnam and Indonesia both offer a thriving pool of skilled engineers, while senior management talent is abundant in Singapore. In order to tap into the specific expertise present in each location, startups such as Grab and ShopBack have spread out their R&D centers and offices across a variety of cities.

Secondly, the region’s highly fragmented market means that businesses seeking to penetrate the region encounter a unique set of challenges and opportunities in each market segment. As such, setting up a distributed workforce - to build up local teams and connections - allows businesses to better understand the landscape and regulations of each country, giving them a competitive edge in their expansion efforts.

In Singapore, coworking spaces have sprouted across the country. From having just a single coworking space in 2009, the city now boasts an estimated total of 53 spaces. Vietnam has more than 50 coworking spaces - a fairly rapid increase, given that one of its first coworking spaces was set up in 2012. And cities like Manila have attracted a slew of coworking companies launched by global enterprises such as HP, Microsoft, Ayala Land and Penbrothers.

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Beyond local and regional chains, global players in the coworking space are also making their foray into the market. WOTSO, Australia’s largest coworking space provider set up its first Asian workspace in Singapore in 2016.

A projection by Regina Lim, National Director — Advisory & Research at JLL rounds up the growth potential of the coworking vertical within the region: “By 2030, co-working spaces could make up 10 to 15 percent of office stock in Southeast Asia, compared to only 1 to 5 percent today.”

SEA countries see coworking as a way to increase entrepreneurship

Coworking spaces don’t just provide the bare basics like office amenities - these facilities also serve as a touchpoint for startups and investors seeking to connect with each other. A collaborative culture and well-curated calendar of networking events fosters a support system that helps budding startups grow.

As such, Southeast Asian governments are increasingly viewing coworking as a means to encourage entrepreneurship among the population. For example, Vietnamese policy makers are setting up coworking spaces for startup companies, among other initiatives in striving towards its goal of transforming Vietnam into a startup nation by 2020. And in Indonesia, the Global Entrepreneurship Program Indonesia (GEPI), part of a wider global initiative formed to promote entrepreneurship among developing countries offers coworking spaces for early-stage startups.

Startups and Scalability

Access to extensive networks and resources for increased efficiency and scalability is one of the biggest attractions for startups looking to join a coworking space.

With this in mind, workspaces like Impact Hub Singapore are striking up collaborations with key global stakeholders. The workspace recently announced a partnership with Google; as part of the Google for Entrepreneurs partner network, it now offers access to global programs like Google Demo Day, an event where startups from all around the world present their technology and meet key stakeholders in Silicon Valley, as well as international and regional ecosystems such as Techstars and KIBAR.

Multinationals, from financial institutions to tech companies, also stand to gain from embracing the coworking concept. Here in Singapore, Standard Chartered and DBS have carved out coworking spaces within their premises to draw in a targeted group of fintech startups and businesses.

These organizations may differ in their approaches, but their objectives are largely similar: to interact with a wide-ranging network of businesses, tap on opportunities for collaborating with fellow workspace members and be part of an environment that breeds innovation and idea generation.

Southeast Asia requires distributed teams

While distributed teams aren’t uncommon among later stage companies as they grow globally, it’s unique to Southeast Asia where CEOs must think from day one about how to build a distributed team. This requires splitting up team members and resources from the headquarters and local offices.

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It’s not an entirely new phenomenon. Renowned startups in the region that have embraced remote work operations early on include media platform Tech In Asia and ride-hailing app Grab. The former has operated on remote working since its early days, running operations smoothly through a virtual office with employees located in Singapore, Indonesia, India and China, while Grab has remote engineering teams spanning across Jakarta, Bangalore, Vietnam and Singapore to leverage “specific sets of expertise” in each of its centers.

And with the emergence of companies like GetLinks - a tech-hiring platform that aims to connect talents across Asia with regional and international organizations - remote operations looks set to be a widely adopted trend across Southeast Asia.

“Every country has strengths and weaknesses when it comes to tech talents,” says GetLinks CFO and Co-Founder Keenan Kwok. “India, for example, has the best data scientists, whereas Vietnam has the top-notch back-end developers. Our regional focus evens out the uneven distribution of talent infrastructure in Asia, empowering innovative companies with the region’s top 5 percent tech talents.”

SEA’s coworking space industry looks set to heat up

With the coworking space segment heating up, there’s potential for local and regional players to move towards becoming the market leader in South East Asia.

Promising developments are in the way for providers like Chinese coworking giant URWork and Delhi-based coworking startup Awfis; the former recently announced that it closed a RMB 200 million investment from Beijing’s Aikang Group, while the latter nailed the biggest funding round in the coworking space in India with a US$20 million series A from Sequoia earlier this year.

But while an increasingly crowded market is positive for consumers and real estate developers, it could spell out a tricky situation for investors seeking a meaningful exit. As with other industries, we’re expecting to see a land grab in this space: some providers may drop out, while others may be consolidated as the big players move towards covering as many countries and markets as possible.


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