[Startup Bharat] How Bhopal-based coworking startup S.PACE aims to disrupt the market in Tier II and III cities
Over the past few years, coworking spaces have seen exponential growth in India. In fact, India is the second largest market for flexible workspaces in APAC, second only to China.
YourStory Research pegs the number of coworking spaces in India at over 850 with a majority concentrated in the metros, including Mumbai, Delhi-NCR Chennai, Hyderabad, Pune, and Bengaluru. But Tier II and III cities have also joined the coworking party, and are hoping the sector will thrive despite the COVID-19 pandemic.
Enter Bhopal-based, which aims to disrupt the coworking segment in Tier II and III cities across the country.
Founded in 2016 by Taytil Singh, Rohan Mehta, Dhanajay Kothari, Siddharth Dwiwedi, Anirudh Thomas, and Niharika Singh, S.PACE provides coworking spaces at lower rents and runs an incubation centre.
Speaking to YourStory, Taytil, Co-founder and CEO, says, “We knew there were lots of people looking for a good office space with a long-term commitment. What inspired us to start up was the idea of creating an ecosystem where all like-minded people came together to work in one space. This ecosystem was lacking in Bhopal. We started with just 10 seats and six cabins; they were 100 percent occupied in 15 days of getting started.”
The startup currently has three coworking spaces in Indore, Bhopal, and Raipur. It aims to expand its services to 10 more Tier II and III cities across the country.
Bhopal-based coworking startup S.PACE provides office spaces at lower rents [Image Credit: S.PACE]
Taytil says S.PACE’s coworking spaces include offices on rent equipped with high-speed internet, meeting rooms, seminar hall, networking zone, gaming zone, and on-desk café services.
“A unique feature in our coworking spaces is that we have cabin-based spaces. We have 80 percent cabins in our inventory because we observed that people from Tier II cities prefer this,” he says.
Apart from office spaces, S.PACE also provides mentorship programmes and a weekly assessment activity for startups. It offers coworking spaces to women entrepreneurs for free for the first three months to encourage entrepreneurship.
“We provide office spaces to women entrepreneurs free of cost for the first three months as there are fewer women entrepreneurs as compared to men and they sometimes can’t survive due to initial overhead expenses,” the CEO adds.
According to the founders, people in Tier II and III cities prefer cabins to open-plan offices. [Image Credit: S.PACE]
Impact of COVID-19
According to a June 2020 report by ORF, the contribution of coworking in office leasing segment is estimated to increase to around 18 percent of the total workspaces in India. The report adds that the potential market size for coworking across India is projected to be 15.5 million, including 1.54 million freelancers, 0.1 million startups, 1.54 million SMEs, and 10.3 million enterprises.
However, the nascent segment took a huge blow amidst the pandemic and in the time of social distancing. According to a report by ResearchandMarkets, the global coworking spaces market is expected to decline from $9.27 billion in 2019 to $8.24 billion in 2020 at a compound annual growth rate (CAGR) of -12.9 percent.
The pandemic also impacted S.PACE and derailed the startup’s initial business plans, Taytil says.
“The impact of COVID-19 was brutal. We always used to run on 90-95 percent occupancy earlier. But when we re-opened in June, we had just 40 percent occupancy. However, I am very grateful they helped us survive the crisis,” he adds.
S.PACE's plans to launch its second coworking space in Bhopal this year were also delayed due to the crisis.
In a bid to survive the pandemic, the startup claims to be doing four-step sanitisation at its buildings and is strictly ensuring all precautionary measures.
Illustration: YS Design
Business and more
Speaking about the business model, Taytil says S.PACE charges range from about Rs 3,000 per workstation to Rs 60,000 for an office suite per month. Present across Bhopal, Indore, and Raipur, the startup at present has a total of 88 workstations, 35 cabins, and 10 luxury office suites. S.PACE has a 36-member team working across the three cities.
“We have more than 100 clients, including, Task Us, Amity, , IIFL Wealth, Hero Fin Corp, KhaDigi, Muskan Dreams, and CBRE, among others. Three startups, including KhaDigi, Thekedarr.com and Care Unit, are also incubated at S.PACE,” the co-founder says.
Some of the notable players dominating the coworking space segment include WeWork,Space Solutions, The Hive, and among others.
Speaking about future plans, Taytil says the bootstrapped startup is looking to raise funds to expand its geographical presence in other Tier II and III cities. It plans to purchase and manage at least 10 properties in North, West, and East India.