An Australian co-working company and business incubator is set to open a Jakarta office in the next 12 months to tap into the city’s vibrant startup culture, and encourages other Australian-based companies to expand their operations to what it describes as the “gateway to south-east Asia”.
The 11th Space – owned by venture capital firm Navanti Holdings – opened its first co-working hub/incubator space in Melbourne this year. The office in Indonesia is the first step in its expansion plans.
“With our Jakarta office plans, we’ve positioned the 11th Space as the ‘bridge’ connecting Australia and Indonesia,” said Michael Gui, an investor in The 11th Space and Navanti Holdings.
“Indonesia is one of the fastest-growing populations in the world, with more than 250 million people – and most of them have got access to smartphones and the internet. They have five ‘unicorns’ [a privately held startup company valued at more than $US1 billion] in Indonesia alone, and many more are emerging.”
Navanti chief executive Ivan Tandyo said that “more than 50 per cent of Indonesians are in their prime age of 20 to 40 years of age and they are driven and technologically savvy.”
While Australia is an established startup market, Indonesia still has plenty of untapped potential, Mr Gui said.
“Currently, Indonesia is more aggressive in terms of market acquisition and growth. Their funding sizes are bigger,” he said.
Current ‘unicorn’ companies in Indonesia include ride-hailing company Go-Jek, travel site Traveloka, and online market places Bukalapak and Tokopedia. The Indonesian government predicts that the most promising startup sectors will be based around education and healthcare, with the number of unicorns in the country likely to expand by the end of 2019, according to Reuters.
While Jakarta may not have what Mr Gui describes as the “mature co-working ecosystem” of Melbourne, it’s certainly not lacking in terms of operators.
In its Flexible Workspace Outlook Report 2018 report, Colliers International pegged the number of flexible working centres in Jakarta at 107 – more than the 51 reported for Melbourne and the 58 for Sydney.
Of the 347,000 square metres of office space taken up in Jakarta in 2018, 4 per cent was by flexible workspace operators.
With an average desk rate of $216, co-working space in Jakarta is far cheaper than its Australian counterparts ($1022 for Sydney and $818 for Melbourne), according to Colliers International.
“While some may question sustainability, particularly since the flexible workspace sector in Jakarta has only existed during a soft real estate market, operators argue that if the real estate market strengthens, and office rental rate increases in Jakarta, flexible workspace operators may be able to capture an even wider market as cost-conscious occupiers may be priced out of traditional offices,” wrote Colliers International senior associate director, Jacintha Tabalujan Herzog.
Coworking Indonesia, an association of co-working space operators, recently told The Jakarta Post newspaper it estimated there were more than 250 co-working spaces across the country, up from about 45 in mid-2016.
When it launches in Jakarta, The 11th Space will join a bevy of small operators as well as major players such as WeWork and local operator GoWork, which has been rapidly increasing its footprint in both office buildings and shopping malls in Jakarta’s CBD.
Lessons to learn from Melbourne
Navanti already participates in what Mr Gui and Mr Tandyo describe as a “strategic partnership” with the Indonesian government from its Melbourne base.
“The Indonesian government loves it because they want Australia to become a top-10 [trade] partner,” said Mr Tandyo, who was born in Indonesia.
“We put money into several companies [and] they ended up expanding from Melbourne to Indonesia [and] from there they springboard to Singapore, etc.”
Navanti-backed Encore Productions (a “boutique branding house”), Kirana Kitchen (a kitchen appliance manufacturer) and Xynergy (a real estate services company) are some of the companies that “had their humble beginnings in Melbourne” and have subsequently expanded into Indonesia, Mr Tandyo said.
The company also promotes Indonesia as an investment destination at events hosted at The 11th Space, its part co-working hub, part incubator, located at 580 Collins Street in Melbourne.
“We do a lot of events related to this relationship – like ‘how to do business in Asia’,” Mr Tandyo said.
Navanti has a stake in more than 10 businesses (including The 11th Space) spread across south-east Asia and Australia and The 11th Space houses the company’s Australian-based holdings as well as its incubator platform N-Cubation.
The company is treating its Melbourne co-working space as a blueprint for their overseas expansion – noting the local trends that they can integrate into markets like Indonesia.
Unlike large coworking companies, The 11th Space “curates” its membership – meaning members are selected according to how they align with Navanti’s goals.
“It’s more than a space, we are heavily involved in the businesses that are part of that system,” said Mr Gui.
Mr Gui estimates that about 60 per cent of desks at the 11th Space are used by Navanti companies with the remainder available to external companies. Prices start at $40 a day for a desk, with a private ‘cube’ space starting at $600 a month.
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