China’s burgeoning co-working sector just got another burst of cash, with Shanghai-based shared office startup Distrii closing on a RMB 200 million ($30 million) round of financing from a group of global investors.
Singapore’s City Developments Limited (CDL) and California-based Junzi Capital both contributed to the Series A investment round, which was led by Shanghai Hefu Investment, a unit of mainland property group Jingrui Holdings. The infusion of capital will be used to accelerate the growth of Distrii’s shared office platform in China and its ultimate expansion into overseas markets, according to a statement.
A company spokesperson revealed to Mingtiandi that Distrii is considering setting up future locations in Sydney, Melbourne, Tokyo, Bangkok, Jakarta, Kuala Lumpur and London, in addition to a planned centre that will open in Singapore’s Raffles Place next year.
The two-year-old startup has built a network of 22 co-working centres in operation or soon to launch in Shanghai, Beijing, Hangzhou and Singapore. Distrii’s platform of mid- to high-end shared office spaces totals nearly 10,000 seats and serves 400 enterprise users. The company is aiming to bring its portfolio to 80,000 seats by the end of 2019 and grow its valuation by around ten times within three years.
“Smart Office” Player Gets $30M Boost
The new financing should come in handy as Distrii looks to compete with international and homegrown rivals in China’s increasingly crowded shared office market. US giant WeWork is raising billions of dollars for its Asian expansion – including a new, $500 million China entity – while mainland competitors including UrWork and naked Hub are also jockeying for capital and market share.
Distrii positions itself as a uniquely tech-savvy platform that offers its members cloud-based services and a proprietary app to help them build communities and get work done. “What Distrii is really doing is to use the Internet to transform office spaces and create mobile office space products more suitable for mainstream enterprises,” said Hu Jing, founder and CEO of Distrii in the statement.
Hu, a former executive vice president at Greenland Group, set up Distrii at the end of 2015. The startup received initial backing from Nasdaq-listed Huazhu Hotels Group and CDL, and other founding members include former execs from Greenland Group, Regus, and China Vanke.
Developer CDL, one of Singapore’s biggest commercial landlords, invested RMB 72 million ($10.5 million) this past January to buy a 24 percent stake in Distrii. With that backing in hand, the co-working brand is building an overseas team and lining up tenants for its first centre in Singapore, a 62,000 square foot (5,760 square metre) space in CDL’s Republic Plaza skyscraper.
Slated to launch next April, the flagship location in Raffles Place will be one of the largest co-working facilities in the city-state, exceeding Distrii’s three-storey Suhe Center in Shanghai’s Jing An district. That flagship China location includes a gym, cafe, indoor green landscaping, and other amenities covering 4,200 square metres.
Mainland Rivals Vie for Capital
Junzi Capital, which joined the most recent investment in Distrii, also took a stake in lifestyle real estate startup 5Lmeet, contributing to the RMB 400 million Series A financing for the company last October, according to Crunchbase. 5Lmeet founder Mao Daqing is best known as the founder and CEO of Distrii competitor UrWork, a Beijing-based co-working giant with 100 centres in 30 cities across China.
Just this week, URWork announced a strategic partnership with another flexible office brand, Shanghai Fountown Entrepreneur Services, which operates 20,000 workstations across 25 locations in Shanghai, Beijing and Chengdu.
Distrii may also have to keep an eye on Gaw Capital-backed naked Hub, which targets the upper end of the co-working market with a platform of ten centres in Beijing and Shanghai and a recently opened facility in Hong Kong. The Shanghai-based startup merged with Singapore’s JustGroup in July to create the largest premium shared office network in Asia, spanning 41 locations.