Offerings accelerate for startups, SMEs

07/08/2018 - 14:10

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Special Report: Thousands of square metres of co-working space are set to open in Perth in the next 18 months, and it’s clear smaller businesses are looking for more than just a hot desk.

PROGRESS: Spacecubed plans to continue to grow its offering, according to founder Brodie McCulloch. Photo: Gabriel Oliveira

A plan by co-working hub Spacecubed to significantly boost its footprint in the next two years is part of a major expansion in the sector, with other shared space operators including Liberty Executive Offices, The Platform Perth and Claisebrook Design Community also targeting growth.

The shared workspace sector is a fluid market, with the growth more than filling the gap left by those that have exited, underscoring the importance of building an ecosystem and a community around co-working hubs.

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Spacecubed’s plans come after the company doubled its space in the past year, with 1,000 square metres at the original hub at 45 St Georges Terrace, now known as Riff, growing to 2,000sqm.

Its tenancy at Parmelia House, known as FLUX, grew from 1,400sqm to 2,800sqm.

That location includes the Core resources hub and the Combine agribusiness space.

Those moves solidified Spacecubed as the largest co-working or incubation space operator in Western Australia, according to BNiQ Search Engine (see list, page 24).

Spacecubed founder Brodie McCulloch said the first part of the coming growth plan would be a renovation at Riff, taking 500sqm of new space from a neighbouring brokerage.

“We’re looking at our model moving forward, we’ve doubled in space every year,” Mr McCulloch told Business News.

He said Spacecubed would be targeting growth towards 10,000sqm or even 15,000sqm in the coming 18 to 24 months.

The organisation had been working with property adviser Knight Frank to find suitable locations.

“All of our growth has really come from members,” Mr McCulloch said.

“Quite a lot of the companies in our spaces are growing.

“If a six-person team puts on another two staff, the amount of space they need grows by a third.

“That’s where we see a lot of growth coming, firstly in the spaces but also in the support programs.”

Co-working spaces globally were expected to expand from around 1.5 million members to 8 million in the next five years, Mr McCulloch said.

He emphasised that effective co-working hubs offered more than a desk – they provided a community with mentoring, training events, accelerator programs and hackathons.

“We’ve succeeded through focusing on supporting (our) community,” Mr McCulloch said.

“The desks, chairs and space is the easier part of that.

“A lot more energy and resources goes into the programs, support mechanisms that build community and build connections.

“Our members could work from home if they wanted; anyone can work from anywhere now, so they’ll choose the most productive space to work.

“Also, we’re set up as a model where we’ve had to make money from day one to survive.”

Spacecubed’s main accelerator program is Plus Eight, which is run in collaboration with Telstra’s muru-D, while hackathons include Ministry of Data’s AgHack and Unearthed’s mining challenge.

“(Accelerators are) fuelled by what the investors are interested in,” Mr McCulloch said.

“They pop up around specific need, so there’s a group of angel investors wanting a more structured way to invest.

“Vocus Upstart popped up through that; it was really driven by (former Amcom chair) Tony Grist and (Australian Tenders chief executive) Rob Nathan.”

Plus8 will continue in 2019, but Spacecubed is considering the best accelerator model in the following years, and whether to focus on industry verticals or to target investments in specific technology.

“Two years ago when everyone was going through Vocus Upstart, blockchain had only just started being talked about ... things change really quickly,” Mr McCulloch said.

“We’re over in Sydney next month, with the muru-D guys just looking at it going forward.”

Agriculture, resources and property were the technology spaces likely to be prioritised for the WA market, he said.

Another big move will be by office space provider Liberty, which is doubling its footprint in Perth to about 4,800sqm, including through a new co-working space at 53 Burswood Road.

The Burswood site will be an offering of 1,100sqm, including private offices, while Liberty is adding an additional 458sqm at 37 St Georges Terrace in the city.

As part of this push, Liberty signed a deal with Atomic Sky, the business that powered the Tech Hub in Northbridge, in early August.

Tech Hub moved to Allendale Square, according to Atomic Sky founder Peter Rossdeutscher.

Tech Hub has outgrown our Northbridge location so we have just relocated to Allendale Square as part of a broader expansion in partnership with Liberty,” Mr Rossdeutscher said.

Tech Hub Burswood will also be opening in tandem with Liberty’s new building in Burswood later this month.”

Atomic’s other main co-working brand is Studio Startup, a hub focused on creative industries, at 143 Barrack Street.

That’s one of a handful of spaces for creatives, including the Claisebrook Design Community, which launched in May 2016.

Community manager Beth Parker said it was redeveloping part of its 930sqm space, the second change after an extension was built when it hit initial capacity.

Part of the latest redevelopment is to offer more dedicated desks, to balance existing hot-desking offerings.

“We have about 40 members ... we’re hoping to extend that to be about 50,” Ms Parker said.

“(It’s) a unique thing in the co-working model, people want to co-work but they still want their own space, it’s quite a uniquely Perth attitude.

“People know the benefits of co-working spaces, they love the community, but they can never quite tear themselves away from having their own little private space.”

Tenants at the Claisebrook space range from graphic designers to architects, and include food delivery service Deliveroo.

A big part of the Claisebrook community model is venture capital fund Little Fish Group, an east coast outfit that backs the space and has funded entrepreneurs linked to the hub.

Founded by Gene Barker, Little Fish was inspired by changes by the federal government to encourage investing into innovation.

“It’s not an incubator in the strictest of terms, it’s only a $10 million fund,” Ms Parker said.

“But the idea with this place was to help us incubate our own investments.”

About 75 per cent of the fund has been allocated so far.

Market shifts

Several new co-working spaces have opened in the past year.

Y.hub, in Yanchep, is operated by Spacecubed, and was created by a local developer to spur employment in that growing district.

It has about 400sqm of space.

The University of Western Australia has added to what it calls an innovation corridor on Stirling Highway, with the IQX space at the old Masonic Hall opening earlier this year.

The hub is being operated by Business Foundations.

IQX manager Jo Hawkins said the university had been careful not to replicate other nearby services, such as the Centre for Entrepreneurial Research and Innovation, and Bloom.

CERI, founded by Charlie Bass, was established to help researchers commercialise their ideas, while Bloom was created as a hub for young entrepreneurs founding startups.

The theme with IQX was to encourage collaboration between business and researchers at the university, Ms Hawkins said.

IQX is at the old Masonic Hall on Broadway. Photo: Gabriel Oliveira

Facilitating that knowledge exchange was important, she said, because there were thousands of exceptional, curious minds at universities able to help solve the problems of local businesses.

That expansion of new spaces has come at a time when other facilities have left the market, however.

Probably the most instructive example was The Growth Box in Malaga, which Business News revealed in May had shut after nine months in operation, after only one tenant took up a lease at the hub.

North Metropolitan TAFE’s Sixty27 hub in Joondalup was also no longer required, according to the TAFE’s managing director, Michelle Hoad.

“All in all it was a great success and we really developed a strong startup community in the Joondalup area, well connected to training opportunities,” Ms Hoad told Business News

“We also built up relationships with other support options, such as Business Station and others. 

“Since that time there has been growth in co-working spaces, particularly in the CBD, and also ECubic, a small business incubator supported by ECU with slightly larger office facilities. 

“This model of business incubator with a full office facility available for lease has proven to be a popular model in the Joondalup area, as some startups outgrew our co-working space options.”

The Fortix Accelerator program also signed up for a 2,000sqm office space at News Corp’s Northbridge building in December 2017, but it appears development of that coworking space is paused.

Accelerating development

As growth in co-working spaces continues, so have programs such as accelerators and hackathons to support entrepreneurs.

Hackathons are events held across short timeframes, such as weekends, where entrepreneurs design technological solutions to problems.

Examples include the Ministry of Data’s program, which this year ran a hackathon to solve some technological challenges for the agriculture industry.

Accelerator programs select businesses at a particular stage of their lifecycle and move them quickly through steps to commercialise or develop.

In addition to the aforementioned Spacecubed Plus Eight, examples include Atomic Sky’s Start Something, and Agristart’s Harvest.

Harvest co-founder Tash Ayers said the first round of the program had been completed in May, with more planned this year.

It ran for three months, with participants devoting about a day per week.

“A lot of these companies, they perhaps have contracts in mining or defence but they’re looking to get their foot in the door with agriculture,” Ms Ayers told Business News.

“Our program isn’t like other startup programs; it’s targeted for later stage startups and SMEs.

“We’re looking for companies that have already got a bit of traction, got a bit of revenue, past the prototype stage, and they’re at the point where they are ready to expand and scale, and hopefully export.”

Ms Ayers said a second round of the program would start in September, while an intensive version of the program would run over a shortened time frame at Muresk Institute.

Next year, however, it would be likely to run only once.

“There’s a lot of demand for the program, we really have a backlog to be honest,” she said.

A big difference to other accelerator programs was that Agristart did not take equity, Ms Ayers said.

And she stressed the importance of getting the right cohort.

“It’s probably the businesses that are in the program (that make it successful) ... if you can attract a strong cohort (that’s important),” Ms Ayers said.

“It wouldn’t have worked if we didn’t have such fantastic businesses that put everything into the program.”

Another new program will be Gemstar’s Young Gems, which will kick off at the end of August.

It follows the business opening an Innovation Centre of Excellence on Pier Street earlier this year.

Gemstar co-founder Gemma Manning told Business News the company had existing operations in Sydney and Singapore, and had been operating for five years.

“(Five years ago) the funding environment was a little bit different to what it is now, so we saw a bit of brain drain,” Ms Manning said.

A second driver was that few Australian startups were tapping into opportunities in South-East Asia, she said.

Gemma Manning. Photo: Gabriel Oliveira

“So that’s why I founded Gemstar, to (encourage) Australian tech companies, innovators, fast growth businesses, to say we should be looking at our regional neighbours in our business growth strategies,” Ms Manning said.

Gemstar was formed to be the market access partner to do that.”

WA’s innovation agenda was very aligned with what investors in the South-East Asian region were looking for, she said.

“The talent coming out of WA and the innovations are very robust, and really does lend itself to a global stage,” Ms Manning said.

Gemstar’s offering will be led by marketing and strategy, rather than technology.

Ms Manning said Gemstar had previously taken equity stakes in some businesses that had gone through its program.

Further offerings include an Asian immersion program, and mentoring or residency options at the innovation centre.

“We’ll be running a women in focus Asian acceleration program later this year as well, we want to encourage WA business women to go north,” Ms Manning said.

Fast-growing companies from Asia will also come to the Perth centre as a landing pad, she said.

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