Previously known as EVHive, Cocowork was established in 2015 as a project to facilitate portfolio companies of East Ventures. In time, however, the founders realized they were able to grow the ecosystem and community beyond their original plan. Subsequently, they started to offer their services to their target market – startups and small and medium enterprises (SMEs).
In 2017, EVHive became an independent company and rebranded itself as Cocowork. Claiming to be the largest chain of coworking space rental in Indonesia, Cocowork currently has over 5,500 members across 22 locations in Indonesia, managing total around 31,000sqm of space.
“When you plug in for our membership, you plug in for this big pool of existing members. And as we expand beyond Jakarta, we offer our members the flexibility of moving around different locations. We wish to facilitate small businesses as well as startups in other cities,” says Carlson Lau, CEO and Co-founder of Cocowork, who joined the management last year.
In mid-2018, Cocowork raised $20 million Series-A funding led by Softbank Ventures, the bulk of which were directed to bankroll their expansion plans outside Jakarta. Yogyakarta, Makassar and Bali are already making good progress. The location in each province is based on fulfilling the requests of its pre-existing members and research on market behavior. For instance, in Jakarta Cocowork makes space available mostly in office buildings as people opt to work in a more formal setting. In contrast, people in Yogyakarta and Makassar prefer working space inside shopping malls.
Aside from commercial buildings, Cocowork also manages space by working with the public sector, such as the Cocowork @ Filateli with PT Pos Properti Indonesia, a subsidiary of state-owned postal service PT Pos Indonesia. By retrofitting underutilized property, they are indirectly bringing in crowds of people and creating businesses such as food stalls. In cooperation with the Jakarta provincial government, they have built the Jakarta Smart City Hive (JSC Hive) in Kuningan as a place to meet with foreign delegates visiting the city or simply to interact with private sector members.
“The government plays a very supportive role in encouraging the ecosystem. We have also been approached by other cities like Bandung and Makassar. This partnership helps the government to understand the young generation’s needs and aspirations, get feedbacks and solutions from citizens, and becomes an important forum where both private and public sectors could interact in a very informal setting,” explains Carlson.
For instance, the first level of Cocowork at Plaza Kuningan exudes a casual atmosphere marked by artificial grass flooring and mural-painted walls, colorful beanbags and open desks, sleeping capsules and swing chairs, as well as ping-pong tables and a mini bowling alley. Meeting rooms and event halls are found on the second and third floors. Amenities can be accessed through a daily pass of Rp 50,000, to monthly rent of desks and private offices ranging from Rp 1 to 4 million.
Cocowork earns the bulk of its income from membership fees, made up 90% of startups and SMEs with the rest by corporations. An extra portion comes from members who seek discounted third-party services related to such matters as accounting, legal and tax consultancy, all of which are favored by startups as a one-stop solution to their needs. Hosting events and workshops also generate quite a fair income and encourages attendees to sign up for membership. Rental components and utilities are indeed costly, but Cocowork manages to balance it out by partnering with landlords.
“There are some branches where we don’t pay rent at all, as the landlord wants to participate in the business and enter into a joint venture under a profit-sharing scheme,” says Carlson.
In fact, the business has been profitable and is still growing fast – 55 times within the last year in terms of space, members, revenue, and net profit. To maintain such a pace for the next few years and scale up the business, Cocowork focuses on three areas: managing business process flows, leveraging tech for efficiency, and having the right human resources to maintain the same vibe across all locations.
One model that is increasingly becoming common is the merger between coworking space companies. Cocowork’s location in Medan, for example, is a joint operation with Clapham dating back to 2017. “As one location is inefficient, some people prefer to contribute under a wider umbrella. It also becomes our way to cater to local communities, which helps us to accelerate the growth of our business than just mere number of seats,” says Carlson, who also believes that such a consolidation trend will continue to be a business norm in the market.
By the end of 2019, Cocowork aims to operate in 46 locations with 20,000 members in total, but it will still emphasize expansion in Indonesia. Under a broader plan, Cocowork targets 100 locations within Southeast Asia by 2022, which is why it would also like to follow its members who are keen to expand overseas, such as Manila and Ho Chi Minh City. They will work on understanding the market and replicating strategies and finding human resources who are able to handle new branches.
Currently, coworking space in Jakarta has taken only 3% of all commercial space available. Carlson is certain the business will become more mainstream in the future as there are almost 60,000 new businesses every year in Jakarta alone that would require their services. The largest chain of coworking space from the U.S., Wework, is valued over $20 billion this year with branches spread across 30 countries and has recently entered Indonesia, but Carlson doesn’t see it as a competition due to different market segment. China’s unicorn, UCommune, is also a coworking space valued at $ 1,8 billion. He also sees big opportunities in Indonesia’s large market.
“We believe that with good business comes valuation. When you are only looking at the figures, it might divert your attention from the entire operations of the business. We will feel prouder if we can help our members become a unicorn, rather than us becoming one ourselves,” says Carlson.