China’s co-working unicorn UrWork has agreed to merge with rival New Space, a move seen by many as an attempt to ward off competition from US co-working major WeWork.
The merger, the first in the co-working space in China, will create the biggest co-working space chain in the country with a valuation of RMB9 billion ($1.3 billion). In January this year, Sequoia-backed UrWork achieved unicorn status by completing an RMB400 million ($58 million) Series B round at a valuation of RMB7 billion ($1.02 billion). The term ‘unicorn’ is used to describe startups with a valuation exceeding $1 billion.
Mao Daqing, founder of UrWork and former president of China Vanke, will secure his seat as chairman of the new entity, while Wang Shengjiang, founder and CEO of New Space, will join him as co-CEO, according to media reports citing a New Space announcement.
The company, post merger, will represent over 100 locations in 24 cities globally, including Singapore, New York and London outside of mainland China, even as it plans to expand to 150 locations across 35 different cities.
Meanwhile, the operations of both companies will remain independent, and the strategic deal aims to supplement each other’s resources. New Space, with its services for incubation and fundraising, will provide expertise for UrWork’s registered members. This is also expected to be an appealing element to attract more companies to UrWork’s offices.
Both were founded in 2015, when China had only a few co-working spaces. The number has since then grown and is projected to occupy 30 per cent of the mainland office market by 2030, according to real estate services firm Colliers International Group.
UrWork has raised a total of over $135 million from nine investors. New Space has incubated more than 200 projects, most of which succeeded to the series A round, said a report on TechNode.
The synergy of these two leading players is seen as the answer to the billion dollars-funded WeWork, which has developed eight locations in China. New Space itself reportedly merged with AA Accelerator.
This latest agreement is not the first instance of Chinese startups merging to challenge international companies. Notably, Didi merged with Kuadi to compete with rival Uber, a year before the US ride-hailing service announced a merger with Didi.
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Nine new non-US cos enter unicorn club this year. Six are from China
China: Sequoia-backed UrWork gets $58m from Ant Financial Unit, others
