Kickstart, a Pakistani co-working space firm, has raised Rs200 million from Vital Group to expand the company’s presence in Karachi, Business Recorder has learnt.
Founded in 2016 by Lahore University of Management Sciences (LUMS) alumni Saad Riaz, Khawaja Raza, and Hassan Shahid, Kickstart offers collaborative workspaces in Pakistan.
The company currently manages 12 locations across the country and serves more than 3,000 members.
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With the latest partnership, Kickstart will double its area in Karachi to more than 80,000 square feet.
After the expansion, its total coverage will increase to over 200,000 square feet across 14 locations.
The company says its expansion is consistent with the global surge in co-working spaces.
In neighbouring India, co-working spaces have seen a substantial rise, especially in its top seven cities, growing to 680,000 seats and 43.4 million sq. ft by June 2022, up from 471,782 seats and over 30 million sq. ft in 2019.
By 2025, these figures are projected to rise to 1,025,000 seats occupying 75 million sq. ft.
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In these Indian cities, the share of co-working spaces in the total absorption of office space has risen to 27% in Q1 2023, up from just 14% in Q1 2019.
Similarly, in North America, the co-working market size reached around $4.6 billion in 2023 and is projected to reach $7.73 billion by 2028, growing at 11% annually.
Kickstart starts new vertical
The company has also rolled out a new business model where it will serve as the property manager for landlords and operate on a revenue-sharing basis with them.
“Kickstart has been building and operating premium commercial real estate for 8 years and has built a reputable brand through which property owners can improve their rental yields,” said Khawaja Raza, one of the founders.
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“Traditionally, the rental yield on commercial real estate has been around 5% in Pakistan, which means the owner takes 20 years to recover their investment. With our revenue sharing model, where Kickstart comes in as a specialist operator, the yields can go up to 8-9% with some additional investments in furnished assets and reduce the payback period by 40%,” he explained.
The company, in a statement, stated that its flexible workspace arrangements let new-age companies manage their large teams effectively by scaling up quickly without thinking about heavy capital expenditures based on their future needs.
“In downtown Karachi, where quality office space is a scarce resource, Kickstart equips organisations to provide their employees with state-of-the-art facilities in a flexible manner without any operational trouble,” it added.
The expanded co-working spaces are designed to serve diverse communities, offering private offices for growing ventures, open seating for freelancers, meeting rooms, recording studios, skill-building workshops, and cultural event venues.
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