Sequoia Capital invests $20 million in Awfis, a shared workspace start-up
New Delhi: Awfis Space Solutions, a start-up that provides shared workspaces, has raised $20 million from Sequoia Capital India to fund its expansion plans.
Awfis, which operates 21 workplaces across the National Capital Region (NCR), Bengaluru, Mumbai, Hyderabad, Pune and Kolkata, will use the funds to expand to more than 100 centres in two years, the firm said. It plans to raise the total seat count in its centres to 35,000 from about 7,500 now.
Sequoia’s investment displays the growing investor interest in the area of shared offices, which has seen a number of branded co-working facilities mushroom in metropolitan cities in the past few years.
Currently, the biggest entities in the segment are 91springboard (present in NCR, Hyderabad, Mumbai and Bengaluru), Y Combinator-incubated Innov8 (Delhi, Chandigarh and Bengaluru) and InstaOffice (Gurgaon, Bengaluru and Delhi), besides smaller region-only firms like CoWork India (Bengaluru), AltF Coworking (Delhi and Gurgaon) and Blume Ventures-backed BHIVE (Bengaluru).
WeWork, a leading shared workspace provider with a presence in 15 countries, has also entered the subcontinent.
The New York-based firm will open its first centre in Bengaluru this year and has leased a 16-storey building, representing almost 190,000 sq. ft area, in Mumbai’s Bandra Kurla Complex, Mint reported in January.
Awfis, which opened its first facility in Delhi in 2015, is a joint venture between Amit Ramani, the founder and managing director of real estate design consulting firm Nelson India, and The Three Sisters: Institutional Office, a family-run investment firm managed by Yes Bank founder Rana Kapoor’s daughters.
Both parties had invested $11 million in Awfis in April 2015.
Awfis has since expanded its footprint to six of the eight metros in India, with a facility in Chennai expected to come up in three months, CEO Ramani said.
He said the focus is to place smaller co-working centres in the vicinity of the user rather than to have fewer big facilities. “We have identified a sweet spot of 350-400 seats per centre, where our unit economics works and this kind of scale gives us the best-suited setting for a community-based environment,” Ramani said.
Awfis co-working centres are typically of the size of 15,000-20,000 sq. ft. and offer facilities like high-speed internet, video conferencing and printing and have cafeterias.
The space is rented out on a per-seat per-month basis. One seat is priced at Rs3,500-5,500 under the flexi plan (where the seat position is not defined) and Rs8,500-10,000 for a fixed seat. A seat in a private cabin starts at Rs13,000; besides clients have the option of booking an entire cabin or meeting room.
Awfis takes a property on lease typically for a five-nine year period and invests in its renovation and refurbishment. It has also deployed what it calls a ‘managed aggregation model’ wherein the property owner offers its property to Awfis for no upfront cost and takes a higher share of the revenue.
Ramani said that over 50% of its facilities are on the latter model and expects to sign up at least 70-80% of the new properties on this model. He claims that Awfis spaces see about 90% occupancy.