Valuation, financing will be reduced: partner companies
BENGALURU: joint work Business in India expect tough times ahead after industry behemoth WeWork’s botched IPO. These Business were being valued at about 20 times their revenue, a benchmark set by WeWork. But post the acquisition of the company by Softbank at a significantly lower value, investors are looking at valuations of 3-4 times the gross billings, industry executives say. Gross billings is the number of desks these Business rent multiplied by the rates per desk.
The new investments will be distant and few, since the sector has lost a bit of its flavor, said Amit Ramani, executive director of the provider of shared office spaces Awfis, which has Sequoia Capital and ChrysCapital among its main investors.
In today's environment, investors will look for profitable businesses or those that have a clear path to profitability, said Abhishek Goenka, CEO of RMW's CoWrks, which seeks to raise $ 50 million, below the $ 350 million that RMZ and CoWrks were previously Planning to climb. Harsh Lambah, national manager of IWG (formerly Regus), also said valuations would now be more difficult as investors analyze the path to profitability.
WeWork India, the franchise arm of the global parent and led by billionaire Jitu Virwani Embassy Group, saw its attempt to raise $ 100 million from its current lender ICICI Bank frustrated in the midst of this crisis and the company is now looking to raise $ 200 million capital investors
Karan Virwani, who heads WeWork India, said the path to profitability and cash flow is the big focus now. He said the initial interest that investors showed has “shaken” a bit. WeWork India said growth henceforth will be a lot more controlled. The company, which has 37 centres across six cities, plans to double its current capacity of 45,000 seats and turn profitable by the end of 2020. The combined operating losses of major Business like WeWork India, CoWrks, Awfis, Smartworks and Regus stood at about Rs 320 crore for the fiscal ended March 31, 2018, as per data from business intelligence Firm veratech. The number would have increased in the last financial year.
However, despite concerns, Smartworks last week received an investment of $ 25 million from Keppel Land of Singapore.
The co-founder of 91springboard, Pranay Gupta, also sounded optimistic because of his business model. Some of our competitors are in the middle of BKC, Mumbai and CP, Delhi, and we know that the economy in these areas does not work. Therefore, we install our centers in peripheral areas where the economy works, the customer is happy and willing to pay, ”he said.