KARACHI: Co-working space firm Kickstart has successfully raised Rs200 million from Vital Group, which will help the startup grow its footprint in central Karachi.
A co-working space firm provides people from different companies with a shared office where they have flexible seating options and common facilities like boardrooms, lounges and kitchens.
With the latest partnership, Kickstart will double its area in Karachi to more than 80,000 square feet, a company representative told Dawn on Monday.
Founded in 2016 by LUMS alumni Saad Riaz, Khawaja Raza and Hassan Shahid, Kickstart has been one of the pioneers of collaborative workspaces in Pakistan. It currently manages 12 locations across the country and serves more than 3,000 members. After the expansion, its total coverage will increase to 200,000-plus square feet across 14 locations.
The firm has also rolled out a new business model where it will serve as a property manager for landlords and operate on a revenue-sharing basis with them.
“Traditionally, the rental yield on commercial real estate has been around five per cent in Pakistan, which means the owner takes 20 years to recover their investment,” said Mr Raza, one of the co-founders.
“With our revenue-sharing model where Kickstart comes in as a specialist operator, the yields can go up to 8-9pc with some extra investments in furnished assets, and reduce the payback period by 40pc.”
Kickstart’s expansion is consistent with the global surge in co-working spaces. Across the top seven cities in India, co-working spaces have seen a substantial rise, growing to 680,000 seats and 43.4m square feet by June 2022, up from 471,782 seats and over 30m square feet in 2019. By 2025, these figures are projected to rise to 1,025,000 seats occupying 75m square feet.
Pakistan’s startup ecosystem has been in financial turmoil for many quarters now. Heavily funded start-ups like instant-delivery service provider Airlift and mobility player Swvl shut down operations altogether while other firms have either rolled back services or laid off employees.
As a result, local start-ups could raise a total of only $35.1m in the first nine months of 2023, down 89.4pc on a year-on-year basis, according to statistics compiled by Data Darbar, a website that tracks investment flows into the country’s tech ecosystem.
The number of deals in the first three quarters of 2023 was 21, down by two-thirds from 62 deals a year ago. The fintech segment accounted for the largest share with inflows of $14m or 39.9pc, followed by transport and logistics ($11.1m or 31.6pc) and edtech ($5.1m or 14.5pc).
Published in Dawn, December 26th, 2023