Chinese co-working startup Ucommune announced this week that it has raised RMB 300 million ($43.5 million) in its latest blow in the battle for Asia co-working hegemony.
This new round of funding gives Ucommune a valuation of $1.8 billion and is led by Shanghai-based Prosperity Holdings, which also took the lead in a $178 million investment in the co-working operator just over one year ago, and developer Road King Real Estate, also known as RK Properties.
The investment adds to the nearly $450 million in funding that the company which started life known as UrWork has raised since it was founded by former China Vanke executive Mao Daqing in 2015, and was announced less than one week after co-working industry leader WeWork raised $1 billion in fresh cash from Softbank.
Ucommune Builds Expansion War Chest
“This new round of funding cements ucommune’s position as the absolute leading co-working space provider in Asia,” company founder Mao Daqing said in a statement. “Through this partnership with RK Properties and Prosperity Holdings, we seek to further upgrade our integrated coworking experience through tapping into the community synergy and the potential of commercial contexts.”
Mao indicated that the new funding from its mainland backers, which the company has termed a “pre-D” round, would be used to support ucommune’s global expansion and to improve its services to clients.
The funding announcement on Tuesday came on the same day that ucommune, which has opened more co-working space in China than any other flexible office provider, opened its second Singapore co-working centre in the Suntec City commercial complex. In a statement announcing the Suntec opening, ucommune indicated that the company has plans to open another space in a central Singapore location later this year.
Ucommune Continues to Win Mainland Support
For this latest round of investment, ucommune won renewed support from Prosperity Holdings, a seven-year-old fund manager, with the statement noting that the investment is targetted at supporting ucommune’s efforts in Southeast Asia.
Road King has not previously been identified as an investor in ucommune and is the real estate development division of Hong Kong-registered Road King Infrastructure. The infrastructure group is 27 percent owned by Shenzhen Investment, a unit of the city government.
While ucommune has won support from international firms, the majority of its funding has been sourced from mainland investors.
Sporting goods manufacturer Beijing Xingpai and medical investments firm Beijing Aikang Group, put RMB 400 million and RMB 200 million respectively into Ucommune last year. Sequoia Capital China and Shenzhen fund manager Qianhai Wutong have also backed the shared office startup.
Co-Working Funding Heats Up
This latest round of investment comes less than two weeks after WeWork China raised $500 million in a series B funding round supported by Hong Kong and Shanghai-based private equity firm Trustbridge Partners and Singapore’s Temasek Holdings, in addition to returning investors Hony Capital and SoftBank Group, which invested together with its nearly $100 billion Vision Fund.
Investor enthusiasm for shared office providers is part of what has made Asia the leading region for creation of co-working and serviced office centres. According to a JLL report released on July 3rd, growth of flexible office space, which includes co-working and traditional serviced office, averaged 35 percent annually from 2014 through 2017 across Asia, compared to an average annual growth rate of 25.7 percent in the US and 21.6 percent over the same period.
This enthusiasm for building more flexible offices has provided funding opportunities for a number of startups in the region, with Beijing-based MyDreamPlus, which has 37 locations across China, having raised $120 million earlier this month in a Series C funding exercise.