WeWork was the main name in coworking spaces for several years, with the disruptor model of business workplaces dominating. It initially appeared that would only continue when the We Company announced its public offering on August 14, 2019. However, the increased scrutiny into WeWork’s finances and operations, raised a lot of red flags among financial reporters and potential investors, causing the coworking space giant to postpone the IPO and forcing the CEO, Adam Neumann to step down.
The early investors of WeWork, including SoftBank, may end up taking a financial hit. A fact which is not helped by Mr. Neumann receiving a severance package of $1.7 billion, not including the ability to sell his $970 million worth of shares.
There are any number of reasons as to why WeWork has been turned upside down, since the IPO announcement, including:
However, while WeWork now serves as a cautionary tale against founders having too much control, lack of oversight and growing too quickly, the entire idea of coworking spaces should not be painted with the same brush. When run well, there are number of benefits, such as:
The good can very much far outweigh the bad, when it comes to coworking spaces, but there are things to keep in mind, including the real estate market(s) of wherever the company is located. That proved to be another issue with WeWork, given the historic volatility of the New York City real estate market, where the company had the bulk of its presence. If a coworking space company is located in an iffy market, having plans in place as to how to best deal with real estate’s highs and lows should be part of the discussion when deciding whether or not to invest.
You still like the idea of the coworking space business model and see the value in being an investor to support both the companies and the start-ups that will be doing business in the space. But, after WeWork dominated the market for nearly a decade, which other coworking spaces are out there, doing well?
If you are looking to marry your desire to support entrepreneurs with your passion for social change, then Impact Hub may be the space for you. With a global presence, this is one of the largest networks focused on entrepreneurial efforts that are devoted to social change. The individuals and organizations utilizing space at Impact Hub are dedicated to finding solutions to some of our planet’s biggest concerns.
While Your Alley may not have the national or global presence of some other coworking spaces, this company has locations in New York City, Washington, DC and Cambridge, Massachusetts (only minutes away from MIT). Your Alley also provides great flexibility to the individual and small business, including day passes, dedicated or shared desks, as well as private offices. Additionally, their Weekend Warrior option allows for space to be rented during non-business hours for those individuals with a side hustle who need a coworking space when not at their, “day job”.
This coworking space company has raised an impressive $95M in funding in just one year and had been considered WeWork’s main competitor even before the issues that arose in the summer and fall of 2019. Knotel currently has 45 locations domestically, throughout New York City, Los Angeles, San Francisco and Washington, DC. Their international reach is including London, Paris, Berlin, Toronto and Tokyo, among others. In additional to the traditional office space rentals, Knotel provides options for a small business to design and furnish their space in a way that identifies their brand to potential investors or clients.
Perhaps you are looking to invest in a company that already has a presence beyond the standard cities of New York, Los Angeles, San Francisco, Washington, DC and Boston. In that case, Industrious could be a strategic choice. While this coworking space does have a presence in those aforementioned cities, the Industrious reach also extends to Nashville, Orlando, Pittsburgh, Boulder, Salt Lake City, Kansas City, Portland…this list goes on and on. Whether a start-up is looking for a turnkey canvas or a customized canvas, a suite, a few desks or a designated office, Industrious can likely fill the need.
Despite the WeWork shake-up, coworking office spaces continue to be a popular and affordable option for start-ups and small businesses. As such, more and more coworking space companies continue to pop-up, offering various options from instant access, so you don’t have to make a reservation, to private offices, to branding capabilities. While WeWork definitely taught the industry a thing or two about best business practices in a relatively new field, the companies that remain and continue to grow could very well be the future of how small businesses do business.