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This time I would like to introduce you to a company that is not yet listed on the stock exchange, but would like to change this soon. We’re talking about the Chinese co-working space provider Ucommune.
In co-working spaces, workplaces and office infrastructure are made available for a limited time. The greatest advantages are usually the creative exchange between the various tenants and the cost-effective scalability of office space.
When I first heard of Ucommune’s plans, my first thought was inevitable for the US company WeWork. This year had to cancel the grandly announced IPO. The company is active in the same industry and also offers office space and co-working spaces for the self-employed and companies.
The Americans originally wanted to raise $ 47 billion at the IPO and then had to keep revising down. In the end, the possible valuation was “only” between USD 10 and 20 billion. This led to CEO Neumann being dismissed under pressure from investors and the IPO canceled. There was much criticism of the loss-making business model, which was ultimately the reason for the loss of trust in the company.
Will this be repeated at Ucommune? I do not think so. The dimensions are much smaller here. For one thing, the company just wants to raise a modest $ 100 million on the New York Stock Exchange (NYSE). On the other hand, Ucommune is far less hyped in public than its big US competitor WeWork.
As already mentioned, Ucommune is a leading provider of office space and co-working spaces for the self-employed and companies in China. According to the Frost & Sullivan market research institute, Ucommune offers the largest co-working community in China based on the number of premises, the total managed area and the number of cities covered in China.
The size of the Chinese co-working market, calculated from rental and service income, rose from USD 170 million in 2013 to USD 2.5 billion in 2018. By 2023, this market is expected to be 18 Reach $ 84 billion (!).
The Beijing-based company was founded in 2015 by Dr. Mao Daqing founded. The architect recently raised enough liquidity from investors in a financing round that his company is now valued at USD 1.7 billion.
Mao is currently in talks with international investors to raise another $ 200 million. The business is to be expanded to 40 cities in mainland China and the Southeast Asian market is to be conquered. The Ucommune network comprises approximately 10,000 companies and more than 120,000 members. In addition, Ucommune now owns a number of properties in New York, San Francisco and Los Angeles.
According to Mao Daqing, investments should be made in the construction of facial recognition systems to guarantee greater security in the offices offered. In addition, money should flow into the development of blockchain and other intelligent office solutions in order to stand out from the competition.
Above all, the CEO wants to grow rapidly in the fast-growing areas of China, where property prices are very high and rental prices are rising rapidly. There, the Ucommune network is to offer customers cost advantages compared to other landlords.
Some successful Chinese start-ups are already tenants from Ucommune-Spaces and are growing in demand for more and more office space. So e.g. KuaiShou is a live streaming app popular in China with 60 million active daily users. The platform received $ 1 billion from investors and is also preparing to go public.
- To empower innovative minds
- To build community through smart deployment of tech
- To be architects of the good life for all
The mission seems to be well received by customers. According to the CEOs, new properties typically reach 90-95% occupancy within six months of opening. In addition, 80% of all locations are already profitable. This cannot be said of the company yet, but Mao is optimistic and claims that it will only take another year to break even.
In addition to the IPO in the USA, the founder is also considering selling 25% of the company to investors by listing on the Hong Kong or Shanghai stock exchanges.
So there will be opportunities for investment. An interesting company, which I will keep an eye on.
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