Is JustCo Southeast Asia’s co-working unicorn?

Some people have vivid dreams about who they want to be and what they want to do. Wan Sing Kong didn’t quite start out that way. Instead, he went to business school in New York, launched an equity research startup in Boston that folded in six months, and then eventually joined his family’s real estate business. After spending a decade in the property space, he was ready to retire and work on improving his golf swing.

But far from that placid picture, the entrepreneur finds himself at the helm of JustCo, a chain of co-working spaces present in seven countries. And despite the pandemic, the Singapore-headquartered company is expanding.

At a time when co-working businesses across the globe are focusing on undoing the damage done by Covid-19, JustCo’s valuation has only soared.

While JustCo chose not to comment on this development, research firm VentureCap Insights pegs the startup’s valuation at just north of US$1 billion. The amount is based on filing data after JustCo scored US$74 million from Japan’s Daito Trust Construction early this year.

“If equity holders are willing to value the company’s equity at US$1 billion while the company is carrying liability of US$442 million, the actual intrinsic value of the business they see should exceed a billion dollars quite dramatically, at least to that last tranche of investors,” Dmitry Levit, partner at venture capital firm Cento Ventures, tells Tech in Asia.

Most of that liability comes from lease commitments, according to JustCo’s financial statement.

Over the years, co-working companies have been valued anywhere between “1x revenue multiple to 20x revenue multiple, even when they were not profitable” as they were positioned more as tech startups than real estate businesses, says Michelle Yong, co-founder at co-working space Found8.

The bigger the growth story, the higher the multiple, according to Yong. In the case of JustCo, which positions itself as a real estate company, its rising valuation “could reflect the belief that the post-Covid new normal will see an increasing demand for co-working spaces due to the greater flexibility and, in many cases, affordability that they offer,” she says.

Friends in high places

JustCo’s co-founders include Wan Sing’s wife Lu Liu, who serves as chief operating officer, and his brother Wan Long, the company’s chief commercial officer. The team has raised money from powerhouses such as Singapore’s sovereign wealth fund GIC and Frasers Property, among others.

Established in 2011, JustCo’s path to enviable valuations (and equally enviable investors) appears to hinge on finding the right partners. In many cases, these partners double as the company’s landlords and investors. For instance, while Frasers owns and manages properties, GIC’s investment portfolio includes real estate.

This relationship hasn’t gone unnoticed by the industry. “While we have no visibility on JustCo’s numbers to substantiate their valuation, their approach to entering new markets has been interesting,” says Rick Thomas, executive director and head of occupier services at Colliers International in Singapore.

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