Hospitality investment firm Cornerstone Partners Group has acquired a 10 per cent stake in co-working space Colony in a deal valuing the eight-month-old company founded by entrepreneur Timothy Tiah in the $15-20 million range.
Financial details of the investment by Cornerstone were not disclosed.
Aside from supporting new development plans and renovation costs, Colony intends to use the funding raised to expand to more locations and invest in talent, said an announcement on Monday.
The startup has raised a total of $5 million to date and is looking to open more locations in Kuala Lumpur this year after its first location at Jalan Kia Peng turned profitable in its first three months. The latest funding represents a 4x return for the co-working space’s early investors, it said.
Colony offers reserved desks, hot desks, private suites, and prepaid passes along with amenities such as nap rooms, massage room, rooftop gym/swimming pool access, and in-house Espressolab coffee. The company plans to open its second location at KL Eco City in June this year.
Meanwhile, its latest investor, Cornerstone Partners, owns hotel assets in Malaysia and Taiwan — including the DoubleTree Resort by Hilton in Penang, the Kimpton in Taipei and the upcoming citizenM in KL City Centre.
With the investment, Cornerstone sees potential synergies with Colony and the hospitality industry. One such possibility is building a Colony in each hotel location to replace the traditionally low-yield business centre that hotels have.
“Our investment in Colony signifies our confidence in Timothy’s leadership and Colony’s potential. We were amazed at how Colony was able to take the co-working space model that was largely unprofitable to one that is as lucrative as Colony is today,” said Jason Chong, CEO and co-founder of Cornerstone Partners Group.
The investment also finds rationale in the expected growth in demand for serviced offices and co-working spaces are projected to grow across an eclectic mix of industries and professions as they search for contemporary work environments, according to Knight Frank Malaysia’s 2017 Round-up and 2018 Outlook. While the trend is popular among small-medium enterprises, more corporate blue-chip companies have also started to provide flexible working locations.