Hillhouse, General Atlantic Lead $120M in Funding for WeWork China Challenger

WeWork challenger MyDreamPlus has raised $120 million in a Series C funding exercise involving six investors, including venture capital players Hillhouse Capital Management and General Atlantic.

The C-round was the Beijing-based company’s fourth and largest funding exercise so far, bringing its total raised to $187.8 million as the co-working operator fights for its share of the world’s most competitive flexible office market.

The fundraising by MyDreamPlus’ holding company, Beijing Dream Plus Information Technology, was announced on 12 August in a press release by General Atlantic.

Technology and Space

The new batch of funding will enable MyDreamPlus to build on its network of 37 co-working centres covering about 300,000 square metres (3.2 million square feet) of space throughout mainland China. The three-year-0ld company’s portfolio includes seven centres in Chengdu, 19 in Beijing and one in Shanghai, where it reports 95 percent occupancy by a tenant list including Tencent, AirAsia, COFCO, DiDi Chuxing and Toutiao.

To add to its existing footprint, the company founded by mainland entrepreneurs Mengfei Wen, Wenlei Li and Xiaolu Wang says that it aims to open new centres in Hangzhou and Xi’an, as well as expanding its network in mainland first tier cities.

Within these locations MyDreamPlus says that it focuses on central business districts and on technology-dense areas when establishing new sites.

Looking for a High Tech Edge

In its statement, General Atlantic, which has approximately $19.6 billion in assets under management according to its website, pointed to MyDreamPlus’ technical prowess as key to its market potential.

“MyDreamPlus has a unique service-oriented offering which has been developed through the combined use of data-driven intelligence and design,” said Eric Zhang, managing director and head of China, General Atlantic. “With technology increasingly becoming a key differentiator in the workspace of the future, we believe there is a significant opportunity for MyDreamPlus to continue to grow in the domestic co-working space and workspace market,”

The company, which says that more than 70 percent of its employees are “smart space product developers,” is also using the funds to invest in technology, including development of an office booking app based on the WeChat messaging platform.

“The management team has improved the company’s products and has enhanced the operational and management efficiency of office spaces significantly by using technology to allocate office resources effectively,” a Hillhouse representative said in the statement. “We believe that the company has the opportunity to use innovative platform to further expand its scale, and support the upgrade of the broader co-working spaces and workspace service industry.”

In addition to pursuing tech innovation, MyDreamPlus says that it will use funds from this most recent round to grow its footprint in major urban centres and to build out its network in China’s first tier cities.

Four Rounds and Some of the Same Faces

General Atlantic, which is New York-based and has been around since 1980, has invested in Uber, Airbnb, Renren, Lenovo and Zagat. Also included on the list of participants is Zhang Lei’s Hillhouse Capital, which the Yale graduate and former New York Stock Exchange executive founded in 2005. Also joining were K2VC, a Beijing-based group with a total of 67 investments, Joy Capital, which is an investor in Luckin Coffee, and M31 Capital.

MyDreamPlus’ RMB 300 million ($44 million) Series B round in May 2018 had three investors, including M31 and Joy. A $20 million Series B a year earlier had three investors, including K2VC and Joy, while its Series A in June 2015 only had participation from Joy.

Joining the Mainland Co-Working Battle

The mainland has become an unforgiving battleground as co-working companies fight for the lead in one of the largest markets for shared space in the world and one of the most promising.

Ucommune has raised $406.6 million through eight funding rounds and has gone on an expansion spree, buying up Woo Space, Wedo Space and Workingdom. The company has more than 100 locations in China and like MyDreamPlus is very much focused on bringing technology into the mix. Alibaba-related Kr Space has 270,000 square metres in 11 cities.

But the main challenger for MyDreamPlus is WeWork, which at present has just 42 spaces in China but is outraising everyone. In July, the company raised $500 million for its China operations from a group including Trustbridge Partners, Temasek, SoftBank and Hony Capital. That followed $500 million of investment for China from Hony Capital and Japan’s SoftBank in 2017. And just last week, WeWork raised $1 billion for global expansion from Softbank in a convertible debt issue.