Chinese WeWork rival Kr Space raises $145m in IDG-backed funding

Photo from Kr Space's website.

Chinese co-working space Kr Space, the Beijing-based startup that competes with WeWork in China, has announced raising Rmb1 billion ($145 million) in a new funding round, led by existing investor IDG Capital.

In a statement on its website, Kr Space said proceeds from the funding round, which also saw the participation of new backers Gopher Asset Management and Yixing Capital, will be used to pursue its new business strategy to achieve its goal of becoming “a full life-cycle enterprise office service provider”.

The company said it wants to deliver integrated office service plus asset management service as part of its new business strategy.

As of April 2019, Kr Space already operates 40 co-working spaces in 10 major cities in China, including Beijing, Shanghai, Hong Kong, Guangzhou, Hangzhou, Nanjing, Wuhan, Tianjin, Xiamen, and Hefei

The company earlier said it aims to expand not only in China but also in Hong Kong, Singapore, Tokyo, and other cities in Asia-Pacific region. As of the first half of last year, the company said it rents desk and offices to more than 2,000 companies and 20,000 individual members.

It was in May 2018 when Bloomberg reported that the co-working space startup announced plans to raise at least $200 million in a new funding round to support the company’s further expansion. Started in 2014, Kr Space already counts IDG Capital, Gobi Partners, and Prometheus Capital among its investors.

The startup is an affiliate of 36Kr, a Chinese online media company backed by billionaire Jack Ma’s Alibaba Group Holding Ltd. It started to run independently from 36Kr in January 2016.

In January 2018, the firm raised Rmb600 million ($94.6 million) from IDG Capital, Gobi Partners, UnityVC, China Minsheng Investment, and Prometheus Capital. It said back then that it will use the funds to boost its portfolio by adding 300,000 square meters of space by the end of last year.

Public data showed that the company also raised Rmb100 million ($14.56 million) in a funding round from IDG Capital in 2017. In 2016, it secured another Rmb200 million ($29.11 million) in a series A+ round from Prometheus Capital and IDG Capital.

Last month, Kr Space’s rival in China, the Softbank-backed WeWork, filed paperwork confidentially with the US Securities and Exchange Commission to hold an initial public offering.

Since its founding in 2010, WeWork has raised more than $12 billion in funding, most of it from SoftBank. WeWork said it initially filed plans to go public in December.

According to a Reuters report, co-working space operators in China are shifting their focus from ambitious expansion plans to services such as customising offices for clients, as rising vacancy rates and tighter financing slow their exponential growth in the past two years.

Industry association China Real Estate Chamber of Commerce said the combined area of co-working space in four first-tier cities in China surged by almost 60 per cent between the end of 2017 and October last year.

However, 40 per cent of the co-working centres were more than half empty as of October and 40 co-working brands had shut in the first 10 months of 2018, it added.