China’s burgeoning shared office market has received another injection of cash with Beijing-based co-working startup Kr Space completing a new RMB 100 million ($15 million) investment led by existing backer IDG Capital Partners.
The new financing brings the total raised by Kr Space to RMB 500 million ($77 million) since the company’s launch in January 2016. The spin-off of Alibaba-backed technology platform 36Kr says it will invest the funds in a new real estate product, 4.0 Generation Space, which will roll out its first location in Beijing’s Zhongguancun Science Park.
Making Space for Internet Startups
The new facility by Kr Space targets online startups by combining three distinct areas into a single centre. The Beijing facility will include a zone for members, another for private offices, and a smaller shared space covering 10 percent of the total floor area. In a statement, Kr Space president Zhong Shu said that this mixed model would better cater to the needs of Internet entrepreneurs.
Kr contends that, unlike rival co-working operators WeWork and naked Hub, which increasingly focus on corporate occupiers and are foreign-managed, the Beijing firm’s centres are aimed primarily at innovative Chinese startups.
The new funding from IDG Capital, an affiliate of San Francisco-based venture fund platform IDG Ventures, adds to a previous investment in Kr Space by China Minsheng Investment Group (CMIG) in July and a combined RMB 200 million ($30 million) investment by IDG Capital and Prometheus Capital last November.
Kr Space received its first funding round from mainland institutional and individual investors early last year. The brand is a unit of 36Kr, which also provides technology media, venture capital funding, and incubation services for Chinese startups. Founded in 2011, 36Kr is backed by financial players including Chinese fintech giant Ant Financial, an affiliate of Jack Ma’s Alibaba Group.
Co-Working Funding Battle Rages On
In addition to taking on WeWork and naked Hub, Kr Space faces competition from Beijing-based URWork, the $1.3 billion shared office startup founded by former Vanke executive Mao Daqing, which last month closed a RMB 1.2 billion ($178 million) round of financing from a group of mainland investors to fuel its domestic and overseas expansion. The company backed by mainland VC heavyweights Zhen Fund and Sequoia Capital China has a network of over 88 locations in more than 22 cities.
US shared office giant WeWork is also picking up its game in China after it recently raised $4.4 billion from Japan’s SoftBank and its Vision Fund for an Asian growth drive. WeWork has now opened nine centres in Greater China, and has at least six more on the way, aiming for a grand total of over 15,000 desks.
Shanghai-based naked Hub has also emerged as a key co-working player, teaming up with partners such as Gaw Capital, China Vanke and Minghong Group for its projects in Shanghai, Beijing and Hong Kong. The company merged with Singapore’s JustCo in July to create Asia’s leading operator of premium co-working space.