THE ROLE OF COWORKING SPACES FOR START-UP

Minh Nguyễn Đức
Academy Of Finance - Vietnam

The research paper shows the role of co-working spaces in support of Start-up student.

Ecosystems for innovative start-up are being strongly developed in Vietnam, with the help and backing of the government, state agencies, investors and organizaitons. Co-working Space is one of the few organizations which played a significant part in the current start-up community. Thanks to its unique characteristics, Co-working Space not only provided a dynamic, creative working environment, but also helped customers with specialized knowledge, market information, start-up knowledge, networking…  

Start-up Student is a very important sector in the innovative start-up ecosystem, with leaping growth in both quantity and quality.  However, they are still faces with many limitations such as inadequate soft skills, low capacity, insufficient knowledge about the market, legal system, lack of experience...

Overall, it can be seen that Co-working Space is the most complete and effective model in order to support Start-up Student.

Keywords: Coworking Space (CWS), Human Resources, Inovative Startup, Industrial Revolution 4.0, Startup Student.

Vietnam is in the industrial revolution 4.0 era, the era in which start-up formed one after another, with the dreams and ambitions of the youth of making careers and contributing to society. Stemming from the dream of starting a business, creating a new working environment, creative space, supporting, enhancing the quality of human resources, promoting the development of start-up students, Coworking Space has flourished significantly in recent years.

Chapter I : Introduction to research topics

    1. Background of the study

According to the statistics from the Enterprise Development Department (Ministry of Planning and Investment) in 2016, there are more than 600,000 small and medium enterprises in Vietnam, accounting for 95% of the total number of enterprises in our country. For the most part, these businesses have developed their businesses on the digital platform (SMB Digital) and is seen the premise for the creation of innovative startups.

Startups (Business Startup) are emerging, fast-growing companies that met market demands by developing an effective business model with products, services, processes and creative platform. These enterprises are important factors in order to promote the socio-economic development of the country.

Student Startup accounts for a small but significant proportion of startups enterprises, because their staff  comprise of youths full of creativity and are quick to seized the opportunity in the transformation of technology in the industrial revolution 4.0.

The problem of finding a new working model that can improve labor productivity, labor skills and working environment is a large concern for enterprises in general and for groups of creative start-ups in particular. Working environment plays a very important role in affecting the nature of creative start-up today, so Co-working space (CWS) was created to meet market demands.

Not only that, Co-working space is gradually becoming a popular working model with high expectations for improving socio-economic conditions, resulting in better labor efficiency thanks to the creative working enviroment, equipped with modern equipments and state-of-the-art "work culture", developing knowledge and skills for creative student start-ups, contributing to the growth and development of students. The co-working space is expected to be a guide for small and medium enterprises, Startup students to move forward, and to build up their positions in the current Vietnam economy.

For the above reasons, our team has chosen to research the topic "The relationship between the common workspace and the development of student start-up in Vietnam".

    1. Aims and significances of the study

The aim of the project is to show the relationship between Start-up students and Co-working spaces.

In term of scientific significance, scientific research has clarified the factors affecting the relationship between co-working spaces and Startups students as well as the influence of common working space on the success of creative start-up students.

In term of practical significance, through the analysis of the role and the intimate relationship between creative entrepreneurial and collaborate work spaces, the paper provides a national orientation for ecosystem development, improve the efficiency and success of Startup students and solutions, proposes to develop co-working spaces to support Startup students.

    1. Objects and the scopes of research of the project

Study subjects of the topic: The relationship between the common workspace and the contributions to start-up students in Vietnam.

Research scope of the project: Studied the common working space of Vietnam in the domestic economic sector and Startup students at Hanoi University of Technology.

- Scope of the time of the study: Secondary data on CWS used in the project is collected from 2015 to 2018.

- Scope of the space of the study: Studied start-up enterprises, creative start-ups at Hanoi University of Technology and common working space in Vietnam’s territory.

1.4. Past reserches on the study’s topic:

In Vietnam, Co-working space is still a new model, so there is not enough scientific research into the impact of the common work space on startups. However, in the world, there have been many studies that give general assessment, objective analyzes of the effects of common workspace on the development of business in Asia (" Coworking-spaces in Asia: A Business Model Design Perspective). However, the characteristics of enterprises in countries around the world are different, so these scientific papers have not really highlighted the influence of Co-working space on small and medium enterprises, especially in Vietnam.

In addition, this topic was formerly placed in the narrow field of study: research the effect of Co-working spaces on a small part of the workforce, namely freelancers (“The rise of coworking spaces: A literature review” shows how the emergence of CWS has affected freelancers and the labor market in general; "The ambivalence of coworking: On the politics of an emerging work practice" points out new working environments and how much it influences the labor market), most writings have not yet touched on the impact of the CWS model on the dramatic development of creative entrepreneurship in general and Startup students in particular in recent times. Past studies failed to cover the positive effects of the CWS in the business sector as well as the economy.

From the listed limitations of previous studies and in the current socio-economic context in Viet Nam, the team have found that studying the connections between the Co-working Spaces and  Startup students was very critical, because this issue will not only affect the national orientation for the start-up ecosystem, but will also provide the opportunity for a common working space to support Startup students.

 

Chapter II: Current status of startup students and supports from co-working spaces

2.1 Overview of co-working space

2.1.1 The concept of co-working space

Co-working space is where people work and share a common area, with well-furnished and  adequate equipments. Therefore, it can be said that utilities and communities are the two main factors that form the co-working space.

2.1.2 Features of co-working space

Illustration 1: Main features of co-working space

The main customers of the co-working space are: startup companies, freelancers, business founders, company employees…

The expense when using co-working space is much cheaper compared to renting normal offices. Therefore, for short-term projects, co-working space is a great solution. For long-term, common space will support the most affordable monthly rates for clients.

Not only that, these kind of working model is beautifully and creavitively designed, to help inspired CWS’s customers. The model is based on dynamic design and is a mixture of all three elements: health, workplace personalization, and comfort. What attracted companies toward CWS is community building. CWS is design specifically to encourage communication between members naturally, organize seminar program, workshop to provide knowledge and experience needed for start-up.

Common working space provides flexibility in timing and the number of days working per week. Also, the freedom of seating has promoted interpersonal exchanges, improved the diversity of activities on the premises and met the needs for private space, relax space, meeting space with partners, team-building space.

In addition, the development and the variety of the co working space model gave many benefits to the Startup and Freelancers community. Every customer has a different taste for their work space and working habits, so in order not to make the customers feel bored with their working space when using the service for a long time (which is the weakness of the office transmission), co-working space also organizes "customer exchange" events through discounted policies to introduce new working places for its customers.

2.1.3 The process of forming co-working space in Vietnam

There are currently 19 co-working spaces in Ha Noi and 15 co-working spaces in Ho Chi Minh City, nearly 30 of which are invested by enterprises and among them are 4 foreign companies looking to enter the market. This included large enterprises such as Toong, Up, CirCO, Dreamplex… This has shown the attractiveness of CWS model in Vietnam.

Illustration 2: The process of forming co-working space in Vietnam

2.2 Overview of start-up

Vietnam has achieved initial success with start-up and currently having a third generation of young start-ups. Not only does the third start-up generation have the advantages of technology boom, the openness of the market and the open management mindset, they also have the market benefits as Vietnam shifted more toward globalization through a series of agreements.

2.2.1 The concept of starting a business

2.2.1.1 Start-up and start-up ecosystem

Start-up is the nurturing and establishing of a business. Providing new products, new services or even trading commodities that are already available in the market but in a unique way… are all called start-up. The process of creating a new field of activity is also known as start-up. This form of business has brought a lot of value to the owner as well as benefits for the society and labor force.

"Start-up ecosystem" is the "synthesis of formal and informal connections" between start-up entrepreneurs (potential or current), start-up organizations (companies, venture capitalists, angel investors, banking system ...) and related agencies (universities, state agencies, public investment funds ...) and start-up process (establishment rate, the number of entrepreneurs who have positive growth rate, the number of entrepreneurs ...). This ecosystem will directly affect the environment of start-up business in the localities.

2.2.1.2 Features of startups

"Start-up must be based on a new technology, the creation of a new form of business or segmentation of new markets". Hence, start-up characteristics must show: breakthrough (creating products that does not appear on the market or have better value) and growth (achieving rapid growth).

2.2.1.3 Objects of Start-up

Anyone can start a career if they want, regardless of age, gender or profession: from young to old, male to female; regardless of domestic or foreign, urban or rural as long as they have new ideas which will benefit both themselves and the whole society.

However, the most potent and capable force to start a career is students. Students are young, healthy, creative and are not afraid of difficulties and challenges.

The conditions in which start-ups students need to have, to cultivate:

- Creativity: is the most important element because only creativity can makes a difference.

- Business start-up capital: this is the main source to nurture the business plan and decide the level of success an enterprise can gain.

- Background knowledge and specialized knowledge.

- Market research skills, financial management skills, strategic planning skills

In addition to the above mentioned factors, soft skills such as time management, emotional management, communication skills ... are also indispensable factors. These skills are not only critical to the success of the business, but they are also the element that helps increase the likelihood of success for startups and gives them the power to face difficult situations and challenges.

2.2.2. Current status of start-up student

Start-up in Vietnam has taken the first steps on the road towards the goal of creating the image of  a startup nation. Techinasia newspaper estimates that there are currently 1,500 startup companies operating in Vietnam - a much higher level of concentration compared to Indonesia, China and India.

The Ministry of Education and Training issued Official Documentary No. 3283 / BGDDT-CTHSSV dated 6/7/2016 on requesting training institutions to report on the implementation of vocational guidance and employment counseling in relation to business and start-up.

In addition to the specialized training program, the motivation and encouragement to start a career in universities has never been stronger. Apart from extracurricular activities, playing-fields, startup contests… many universities and colleges have been active in connecting with start-up organizations to develop their own start-up ideas and projects or to create an environment for students to interact with businesses during the internship.

However, the actual number of students participating in startup programs (according to VCCI) is only 0.016%. There are 62% of respondents said that the start-up activities are just a movement and do not create effective effects. But when it comes to business abilities, 89% of students think that they have the ability to do business and 80% of them intend to take part in business activities after graduation. Moreover, the opportunities for student start-ups are 61% coming from families, 21% from friends and 18% from other places.

It can easily be seen that the growth of  start-up students is increasing rapidly in terms of quantity, diversity, yet they need to focus more on quality, and to create more trust and encourage other students to follow this direction.

  • Strenghts of start-up students:

- Students between the ages of 18 and 25 have health, strong willpower, passion, determination to pursue their dreams and ambitions without hesitation.

- Students who have been taught business at universities have a strong grasp of practical and expert knowledge and this is the foundation to embark on practical work later.

- They can adapt quickly to external conditions, easily face up to challenges from the outside, and solve difficult situations with both knowledge and determination.

  • Weaknesses of start-up students:

- Investment capital: Most start-up students have limited capital, mainly mobilized from sources such as relatives and friends. In order to raise funds from investors, start-ups students need to have good ideas and the ability to develop ideas.

- Most of the start-up students only have in-depth knowledge of how to make products but do not know how to manage business, cash flow management. Moreover, students lack financial accounting knowledge so that they will easily fall into a difficult, exhausted situation. Lack of knowledge in marketing led to an inability to promote their own products efficiently.

-Start-up students find it difficult to face actual challenges from the outside because of their lack of experiences.

- The training and retention of talented people is quite a difficult thing for start-up. The start-up incentives for employees required large financial power, which unfortunately is the first barriers when starting your own company.

- Their working skills are lacking.

- Students have limited social relations which lead to lack of help from their predecessors.

2.3 The relationship between Co-working Space and supports for Start-up Students

Though examining, surveying the students who are interested in starting a business at Hanoi University of Technology, the team has specified current supports required for start-up students, such as market information, expert knowledge, capital, Start-up knowledge, startup, instructors, ...

Illustration 3: Survey the demand for support in Startup Students at Hanoi University of Technology (Source: “Master thesis in Business Administration” by Nguyen Thi Thanh)

From the characteristics of the Coworking Space model, we can see that this model can fully meet the needs of students for start-up support.

Customers of Co-working Space are startup companies, freelancers, business founders, company employees ... come from many different professions, but work in the same space. Start-ups students can take advantages of the openness, interactivity among people in the community using shared work spaces and customer diversity in the Coworking Space communities to expand their network, market research, assess the attitudes of many industries to their startup products.

Thanks to the Networking capabilities offered by Coworking Space, Startup students can develop relationships with their mentors, their predecessors from the same field, to further their knowledge. They can also learn from the successes and mistakes of experienced people to draw lessons for themselves.

When implementing a start-up project, the elements of financial consulting, technology, translation, tax ... are of utmost necessary but the Startup students do not have the time nor the money to go get help from consultancy firm. Coworking Space will address this problem by diversifying the occupations of community participants.

Coworking Space creates a professional, innovative working environment that connects investors and startup entrepreneurs by organizing events, training sessions, and mentoring program from experienced and successful people to young startup groups, increasing the chances of raising student Startup funds.

General workspaces contribute to the development of infrastructures and technologies for creative student start-up:  Build modern and synchronized infrastructure system with advanced equipments (3D printer, CNC machine ...) along with inspiring working environment.

Develop human resources for innovative start-ups, promote linkages, connect innovative ecosystems: Strengthen the co-operation within the community of Coworking Space through sharing the workspace, participating in workshops, meetings, experience exchanges programs, mentoring sessions and creative start-ups…

Illustration 4: Some big events organized in Co-working Spaces in Hanoi and Ho Chi Minh

Chapter III: Conclusion

4.1 National orientation for start-up ecosystems

In order to promote creative Start-up and improve the ecosystems of start-ups, the government has set some objectives and solutions as follows:

  • Completes and develops a creative start-up ecosystem; Create a favorable environment to promote and support the formation and development of types of enterprises capable of rapid growth based on the cultivation of intellectual property, technology and new business models.
  • Completes policies that support and develop innovative start-ups, contribute to the acceleration of rapid and sustainable economic growth.
  • Completes, upgrades the technology platform and content of the startup portal: htpp: //www.StartupCity.vn
  • Provides financial support, encourages the formation and development of innovative start-up clubs in the university.
  • Developes human resource for innovative start-up: allocates funds to implement training programs for knowledge and innovative entrepreneurial skills. Improves capacity for organizations providing services for innovative start-ups. Supports the activities of organizations providing training services on innovative start-ups.
  • Developes infrastructures and techniques for creative start-up: building a modern and synchronized infrastructure system for innovative activities such as: Coworking Space, Maker Spaces, Innovation Labs, Business Incubators, Hub Support Centers.
  • Promotes linkages, linking innovative eco-systems: strengthening cooperation, linkages and connection to improve capacity and attract domestic and foreign resources. Set up the network between universities, colleges and enterprises; Linking domestic and international organizations for innovative start-ups such as innovative start-up centers, start-up investment funds, etc.
  • Researchs, creates Science Park to attract the world's leading technology corporations such as Google, Microsoft, and Facebook to set up R & D centers to form the startup space system. Coworking Space and one-stop support system such as legal, tax, business consulting, etc.
  • Promotes investment for creative start-up: researches, founds start-up funds.

4.2 Suggestions to help Coworking Space support the success of Start-up students

In Vietnam, the number of large-scale Coworking Space with modern equipments such as 3D printer, LAB room ... is still few and far between, with only the typical faces such as Up, Toong,.. To gain competitive advantage and support Startup students, Coworking Spaces needed to equip themselves with modern equipments, and kept up with the development trends in the "technology era 4.0".

The Co-working Space of our country today are mostly small and medium enterprises. They still face many difficulties in: finding clients, raising capital to invest in development and expansion, managing finance, etc. Therefore, the Coworking Space should promote cooperation with each other, forming an unified strength and solidarity. First and formost, in order to be able to do this, coworking spaces should form a "common working space alliance". In Danang, Danang Coworking Space is cooperating with SURFSPACE, IoT Space, Enouvo Space (in Da Nang), CoPLUS Working Space (Hue) and Hoi An Coworking Hub (Quang Nam). The benefits of these alliances are enormous: collaborative media organizations, building online platforms to create opportunities for businesses (especially for start-up businesses).

Not only that, the Co-working space is still a novel model that is not widely known and still needs to be promoted. Setting up a website or app on the phone to promote the common workspace across the territory of Vietnam is very necessary. Currently, in the world, websites such as coworker.com, cobooking.com are increasingly showing its importance in linking the workspace with potential customers, investors, .. Not only that, these apps and websites also support businesses (especially startup students) getting incentives from coworking. And most of all, the app or website will help the common workspace improve the quality of its service, minimizing the drawbacks through the evaluation system, feedback from customers.

Coworking spaces also need to stay up to date with the government's start-up schemes to support the customers. Give advice and organize seminars for Startup members in their community.

4.3 Limitations and research in the future

The research is still limited in terms of the specific data for the financial situation of the Coworking Space. Because the Coworking Space in Vietnam has not made specific announcements for documents such as financial reports, business results ...

In the future, our team will continue to research the financial issues of Coworking Space when related documents are released.

References:

 

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