Chinese Coworking Company MyDreamPlus Raises $120M More, Plans Rapid Expansion

Morning Report: The coworking funding boom isn’t slowing down. After WeWork picks up a fresh billion, a Chinese competitor snags more capital as well.

News broke this morning that MyDreamPlus, a Chinese coworking company, has raised $120 million from General Atlantic and others. The new round brings its total known funding to $187.8 million, according to Crunchbase.

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MyDreamPlus’s new capital is not the only recent round in the competitive coworking space. WeWork, the American giant in the sector recently raised a fresh billion from SoftBank, one of its extant and leading investors. WeWork’s Q2 financial results show quick revenue growth, but staggering expenses and losses. Its operating margins on an adjusted basis come to just 28 percent, and the firm’s net losses have only recently come under the negative 100 percent mark.

According to Deal Street Asia, MyDreamPlus has gross margins of around 30 percent today. That figure allows us to presume that the Chinese company has lower adjusted operating margins than WeWork. MyDreamPlus must consume cash to operate and expand.

The same Deal Street piece reports that MyDreamPlus “has about 300,000 square meters of office space and will add 100,000 square meters in each of the next four quarters.” That implies 133 percent growth in terms of raw revenue potential (holding rents even across old and new spaces) over the next year. That’s the sort of growth that investors covet.

But all the usual worries persist. Some coworking companies sign leases instead of buying buildings. If the economy sours, those firms could be left with high fixed lease costs and falling revenue. Occupancy rates could slip as available square footage rises, pushing down customer rents. And there is a gulf between how the investors value the leading public company in the space compared to how private investors value WeWork and friends.

For now, however, the game continues. More money for WeWork. More money for MyDreamPlus. And I’m sure more money for more folks in the sector soon enough.

Illustration Credit: Li Anne Dias