Why Scaleups are Choosing Coworking Spaces
The economic and health crisis caused by Covid-19 has strongly impacted many sectors, including innovation. Freelancers, startups, and SMEs have had to adapt to these circumstances, and coworking spaces have become positioned as a third alternative between working from home and the traditional office. Due to the fragility of the economy, entrepreneurs must invest wisely as their business’ first priority on overcoming a hurdle that is completely out of our control: a global pandemic.
These are companies with bigger teams and very specific needs, not only because of the speed at which they grow, but because many of them opt for a hybrid and flexible work model that combines remote working and onsite work.
A flexible workplace has become an attractive option for scaleups to relocate because the well-designed, collaborative and safe environment is perfect for scaleups who want to minimise risk. Not only should startups and freelancers be part of coworking spaces, but the large meeting rooms and client services, along with the freedom to expand their workforce and participate in opportunistic networking events and activities are a perfect base for scaleups to focus on their offering.
Startups and Scaleups… What’s the Difference?
According to Forbes, a startup is a company that works to solve a problem where the solution is not obvious, and success is not guaranteed. Startups are usually set up by entrepreneurs who initially use their own money to fund their business venture and are in search of investors to develop a scalable economy model- whether this be through government organisations, venture capitalists or angel investors, or participating in accelerators or incubator programs. In the launch phase of the business cycle, startups are also usually a tech-oriented business with a potentially large market.
In fact, some companies we can’t live without today began as promising startups such as Facebook and Uber, and Airbnb. However, companies who surpass the startup name will always retain their “startup spirit” which includes continuous innovation, entrepreneurship, transformation, and flexibility. These values align with those of a coworking space, as the two go hand-in-hand.
On the other hand, a scaleup is a company that has launched and validated its product in the market, and is known as the next step up from a startup. Once a startup graduates to a scaleup, experimentation in their business model has decreased and the company has found what niche works for them and what makes the company profitable, making them more attractive from an investment point of view. They are highly structured with a bigger team with more defined roles as it has advanced from initial launch to the growth stage.
There is also support offered to scaleups experiencing rapid growth, such as Scale Ireland. In 2019, Irish Tech News reported that 90% of startups take 4 years to grow a tech business of scale. However, this growth period may decrease as in September 2020 the Irish Venture Capital Association (IVCA) published the results of its Venture Pulse survey for the second quarter of this year. The report, which highlights how Covid-19 has impacted VC investment in Ireland, showed the highest levels of investment in Irish start-ups on record, with €363.8 million invested between April and June 2020. This is increased by 58% on the same period last year, showing that Ireland is proving to be a fierce competitor for becoming the scale-up capital of Europe, showing signs of the maturing of the Irish tech sector which will soon show a wealth of scaleups based in Ireland.
Scaleup Trends in Europe
Scaleups are growing fast and show no signs of stopping. The number of European scaleups have been growing consistently by 20% year after year on an average. From Dutch e-bike scaleup VanMoof attracting €12.5 billion for internationalisation to Berlin and Vienna-based logistics startup Byrd raising €5 million Series A to scale up globally, investors clearly have faith in these companies who are focusing on growing internationally. Even at Talent Garden, our scaleups have sparked interest in our coworking spaces as our Madrid campus recently welcomed OnTruck, a scaleup who has managed to raise 17 million in the middle of the pandemic. Health tech scaleup Liva Healthcare and the virtual waiting room scaleup Queue-it are also members of our Talent Garden campus in Copenhagen.
Following Covid-19, large conferences have turned digital. The 2020 theme for BASE conference, an event for startups and scaleups to meet international business experts, is the recurring trend of ‘Humanising Business Beyond Profit’ which features entrepreneurs and business leaders who have scaled up and found success by putting people before profit. As these events can now be easily accessed by a wide community online, our coworking spaces have private workshop rooms with large screens and socially distanced seating arrangements for those who want to participate.
Accelerators have also become increasingly popular for scaleups to receive further funding and visibility- for example the EIT Digital Challenge 2020 is open to all European deep tech companies who want to continue to scale up. The top 5 companies receive international growth support worth €50,000, with the first prize also including a bonus of €100,000. Companies from Italy and Spain were most active and altogether 403 scaleups applied! For companies who are vastly growing but still need external assistance or contacts, our VC in Residence programme in Ireland is designed for entrepreneurs and startups to access the advice and support of experienced VC’s to help them grow. Previously, we have held conversations with top VCs such as Bill Liao and Brian Caulfield.
Looking ahead, Europe will continue to revolve around healthtech, biotech, fintech, and B2B solutions. Cybersecurity and data analytics are also expected to see additional VC investment, in part due to the rapid increase in remote work. As coworking spaces function not only as a hub for members, but also a place to learn and upskill. To assist scaleups who need flexible employees of the highest quality, Talent Garden operates an Innovation school with courses for the workforce to upskill in areas relevant to these industries such as UX/UI Design, Business Data Analysis, and CodeMaster Online Bootcamp.
A New Home for Scaleups
So, why do scaleups choose coworking spaces? Scaleups grow very aggressively and quickly after a successful launch of their product in the market. What happens after you find your niche and are now profitable? There comes a time when a fixed office is not big enough, so having a flexible space for your team, which adapts to your needs at any moment, becomes essential. In a coworking space, these scaleups can grow as fast as they want and only pay for the space they’re using at that moment, turning the office space into a variable cost adapted to the size of their team.
But it is not only a matter of costs. A coworking space can also help these companies to position themselves and improve their brand image and getting involved with international communities that include professionals and companies, events and other activities related to the same industry, such as the digital and technological community here in Talent Garden. In this way they will appear in the media and other channels not only for having raised a remarkable round of financing, but also for getting involved in a multitude of different projects.
At Talent Garden, our opportunities and events do not only cater to startups, freelancers, and SMEs but are also for scaleups so they can work, learn, and connect. Through our online upskilling courses, VC in Residence and networking events, or simply having a coffee with an office neighbour that may lead to a collaboration that changes the way you run your business, creativity and innovation is endless so why not book a tour today?