Investors are keeping a close eye on the evolving economic impacts of the coronavirus. In many sectors, the virus and consequent government lockdowns have reversed previous trends, hitting traditional markets the hardest.
Venture capitalists have responded by investing in those areas that are most resilient and shielded from the worst effects, and are focussing their attention on startups that offer solutions to the new problems that many face. There has been a dramatic rise in flexible work arrangements, and work-from-home has become the norm. This has also led to a surge in tech startups in Malaysia moving to remote work.
We look at the future of co-working in the region, especially after the pandemic.
As many businesses are pivoting towards these arrangements to seek cost-effective solutions, they are attracting investment from eager VCs. There has also been an increased interest in freelance platforms in Malaysia as people try to limit the impact of COVID-19 on their earning capabilities.
WORQ is one such startup, founded in 2017; its pitch is that coworking spaces facilitate productivity and connected communities, and in light of the new economy, investors seem to agree: the firm secured RM10 million ($2.4 million USD) from seven investors in a venture funding round this year. Additionally, WORQ has received loan offers from six banks, hoping to expand their share of the rapidly growing office-sharing market, a sector anticipated to be worth over RM3 billion ($7.2 billion USD) by 2030.
The firm became profitable early in 2017, and back in January 2019, real estate giant Jones Lang LaSalle (JLL) predicted that 30% of the office market would be flexible by 2030. Since then, WORQ’s revenue has increased by 560%, and the firm has big ambitions for their new funding, planning to acquire and manage one million square feet of coworking space, ten times more than it has currently.
The rise of the freelancer
Coworking isn’t the only area that has grown in response to the virus, and VCs have been investing in the freelance sector more than ever. GoGet is an on-demand freelance platform that garnered $2 million USD in a Series A funding round earlier this year. The firm offers a community platform that focuses on what they describe as “reliable and skilled part time help”, often in the form of food and grocery delivery or transport. Over 5,000 businesses have signed up to the platform, including big names such as IKEA Malaysia, Foodpanda, and Lazada Malaysia. Much of the funding was from international sources, with the lion’s share coming from Singapore’s Monk’s Hill Ventures.
Francesca Chia, co-founder and CEO of GoGet, highlighted the changing economy in Southeast Asia: “The traditional labour market is inefficient during these challenging times. Businesses, especially SMEs, need to find innovative ways to cut costs…Our vision is to build a sustainable future of work by empowering both businesses and gig economy workers in the ASEAN region.”
Indeed, GoGet goes beyond what you might expect from a freelancer platform, actively supporting its 20,000 ‘GoGetters’. It introduced elements of ‘gamification’ to engage users, and to encourage workers to improve their skills to acquire more work. The company also plans to develop tools for managing and digitising manual processes across its workforce.
Another freelance platform, Workana, also boasts impressive recent growth in Southeast Asia. Originating in Buenos Aires, Argentina in 2012, the startup recently expanded to the ASEAN region by establishing a regional headquarters in Kuala Lumpur. Co-founder Tomas O’Farrell claims that over 100,000 freelancers signed up to the platform between April 2019 and February 2020.
He sees the service as a boost for Malaysian workers: “Workana has over 30,000 job postings each month coming from all over the world. Our growth here in Malaysia is amazing. What makes it interesting is that Malaysian freelancers are now able to work for companies anywhere in the world and not limit their talent to geographical boundaries.”
What does the future hold for flexible work?
With such rapid growth, some are concerned about the risks of freelance work. Former CEO of the EU-Malaysia Chamber of Commerce and Industry, Roberto Benetello, warned that freelancing exposes workers to exploitation, especially in unskilled domains such as food delivery and ride-sharing. In contrast, Benetello argues that skilled work poses less danger, citing areas like graphic design, data science, programming, and art.
It’s impossible to say for sure how these sectors of the Malaysian economy will fare in the coming years. So much of the growth in tech startups in Malaysia and work-from-home jobs is a direct result of the unprecedented global pandemic. The increased usage of freelance platforms in Malaysia is indicative of the work population’s desire to earn, no matter the circumstances.
What the future holds for these startups depends on many factors: the global response to the coronavirus, discovery and distribution of a vaccine, and potentially permanent changes to businesses and attitudes towards work. For the time being, however, it looks like this sector will continue to resist the economic setbacks that face the rest of the economy, making it a fertile investment ground for VCs.