‘Airbnb for workspaces’ gets $2m for regional expansion

FlySpaces founder and CEO Mario Berta. Photo credit: FlySpaces.

Manila-based FlySpaces has secured US$2.1 million in a pre-series A funding round, the startup announced today. The round was led by angel investor Raymond Rufino – co-president of commercial property manager Net Group –  with “a millennial-led private equity firm” and other local property developers also participating. FlySpaces claims that this is the largest ever pre-series A investment made by Philippines-based parties.

The company will use the money to fund further expansion activity in the region, with a particular focus on Indonesia, and to further develop its technology.

FlySpaces acts as a marketplace for co-working venues, billing itself as an “Airbnb for office and retail spaces.” Playing the role of middleman, it takes a cut of booking fees it secures for shared workspace owners. While it is not the only company to offer such a service – with Liquidspace, Breather and retail-focused Storefront three such counterparts hailing from North America – FlySpaces suggests it is the first to do so in Southeast Asia.

Launching in Manila in October 2015, FlySpaces next expanded to Cebu, and has since established an overseas presence in Hong Kong, Kuala Lumpur, Macau, Singapore, and most recently Jakarta. In November last year, it acquired Malaysian competitor 8spaces in a cash and equity deal.

FlySpaces’s pre-series A funding follows the US$500,000 seed round it closed in January 2016.

Big misconception

Co-working space has become one of the hottest verticals in the startup scene, with providers raising significant funds and attracting big-name investors. Berta tells Tech in Asia that he sees this as symptomatic of a broader trend towards increased use of shared workspaces brought on by economic considerations – and not just on the part of startups, either.

“One specific thing that we have noticed is the big misconception about shared workspaces and who is filling them,” he says. “The reality is that it is not the sexy startups, entrepreneurs, and freelancers driving this industry. Rather, it is MNCs [multinational corporations] which are taking up seats.” According to a report from real estate giant Colliers International, Microsoft moved 70 percent of its New York-based sales staff into a flexible workspace last year. Closer to home, HSBC rented 400 desks in a Hong Kong venue operated by WeWork, while PricewaterhouseCoopers took 100 seats at Collective Works in Singapore.

It is not the sexy startups, entrepreneurs, and freelancers driving this industry. Rather, it is MNCs which are taking up seats.

Berta expects competition to increase as operators try to adjust for differences across the region, such as the mature market in Singapore. “The spaces in places like Manila still have a long way to go to increase their service offerings to match those of Singapore, who are leading the market,” he says. “The number of spaces will start to level out, however we will start to see these spaces compete on differentiated service offerings. Now that the big developers are catching on, like Clock In by Ayala Land and Spacemob’s partnership with Ascendas-Singbridge, we will see others in commercial real estate development look to enter the market.”

FlySpaces, though, is an intermediary, rather than an operator of co-working spaces itself. Explaining the marketplace direction that the company has taken, Berta says that the fact the model was already tried and tested in Europe and North America, but was yet to reach Asia, was key. In addition, lacking the fixed assets of workspace operators meant a low burn rate, allowing FlySpaces to have a wider footprint early on without having to take on debt. “We could focus on developing technology and expanding to new markets relatively quickly, rather than be heavily invested in only a handful of fixed assets,” he says.