Over the last month, Anand Satyan, co-founder of Boutline, has been hunting for space to house his six-member team. The sports fan engagement startup is moving out of Microsoft Ventures’ premises in Bengaluru where it was incubated.
Having worked from co-working spaces earlier, Satyan is keen on a similar arrangement. But his frantic searching has yielded little; all five of the co-working spaces that Satyan approached were full.
“I think we will have to work from home for a few days now, and then we will move into an independent office, maybe,” Satyan told Quartz, “But the problem with an independent office is the high initial deposit.”
Satyan is not alone. With the number of startups in Bengaluru having gone up “ridiculously” in the last few years, several other entrepreneurs are facing the same problem, the 26-year-old said.
Why the rush?
The concept of co-working spaces—shared offices that professionals from different companies can use at the same time—is not new to Bengaluru.
Until a couple of years ago, these spaces were used mostly by freelancers who wanted to work in a more collaborative environment, rather than slogging in isolation from home. Other frequent users of co-working spaces were those who were employed with companies that did not have an office in Bengaluru.
But the booming technology startup culture in the city has suddenly pushed up the demand for these spaces.
“Compared to a year ago, the volume of demand now has gone up significantly,” Tej Pochiraju, director of startups at co-working space, Jaaga, told Quartz. “We try to balance our intake between tech and non-tech, but a majority of the applications we get these days are from tech startups.”
Jaaga is among the oldest co-working spaces in Bengaluru. According to Pochiraju, the space has a “fairly long” waiting period currently.
Cobalt, another popular co-working space, is located in the heart of Bengaluru, near the central business district of MG Road. Over the last few months, Cobalt has seen 80-100% occupancy on most days.
“We are going to add three more floors by November. That will take our capacity from the current 70 seats to 200 seats,” Naresh Narasimhan, the founder of Cobalt, told Quartz.
Often called the Silicon Valley of India, Bengaluru is home to nearly 30% of the country’s technology startups. It has been ranked 15th in a list of top startup ecosystems in the world.
Why the lure?
A co-working space is typically more affordable than setting up an independent office.
For instance, any commercial property in Bengaluru attracts an upfront security deposit equivalent to 10 months rent for the space. “The smallest space I rent will cost me Rs25,000 a month. So, including the deposit, I have to immediately muster up about Rs300,000,” Satyan said.
On the other hand, a co-working space in the city could cost anywhere between Rs3,000 and Rs8,000 per employee per month, with no upfront costs involved.
Space at such a facility can be rented on a pay-per-use basis and even by the hour, which means that a startup does not have to create and maintain space for employees who may be spending more time away from their desks.
Moreover, the rent for a co-working space includes basic infrastructural amenities, like furniture, internet, power backup, and photocopy/print/scan machines. These are items for which a startup would have to spend their own money if they were to set up an independent office.
The trend of technology startups queueing up for co-working spaces in Bengaluru is a reflection of the Silicon Valley, which has hundreds of co-working spaces, often backed by investors.
Perhaps India, which is estimated to have over 11,500 technology startups by 2020, should take a leaf out of Silicon Valley’s book.