Co-living startups are struggling for survival, with 41 of the total 116 firms shutting shop in 2023. According to Tracxn data, VC funding has shrunk by around 85% year-on-year for two consecutive years now. In 2023, the sector managed to raise only about $6 million down from $21.7 million in 2022. In 2021, the sector had attracted funding of $148 million.
A few that have managed to raise money have been small early rounds. For instance, Mumbai-based GetSetHome, an online platform that manages and provides accommodations on rent, raised $1 million last week.
It has not declared its FY23 results, but in FY22 its losses jumped 84.5% to Rs 417 crore. Revenues from operations though grew three-fold to Rs 115 crore.
Stanza has reduced properties in existing cities, pulled back on experimental verticals, and laid-off a section of its workforce.
Another such firm, Nestaway cashed out in June, but at a price which was 95% lower than its valuation. Others like Colive, Coho, Settl and Livit, are still trying to establish themselves in the market.
Some are trying different models like focusing on niche areas like nomad co-living, rural co-living and luxury co-living. For instance, Beach House Project (BHX), a bootstrapped startup, runs invite-only residencies designed and curated for founders and creators. Similarly, Nomadgao, operates two co-working and co-living spaces in Goa aimed at the global digital nomad community. It plans to open up another property in Lonavala next year.
Jaytirth Ahya, founder of BHX consciously stays away from raising VC money. “When you raise money externally there are typical questions that come along with it. For instance, we would have been forced to sell larger ticket sizes, and scale at a higher pace. That isn’t ideal for someone who is trying to build a purpose driven community, where tangible results take more time,” said Ahya.
“A lot of awareness building regarding the co-living concept has happened over the past 6-7 years. Businesses have also experimented with different models and offerings through this period. Now, they have started to figure out what is working and what is not,” said Mayank Pokharna, a co-living sector consultant. He said that in the process of establishing the market, there have been a few casualties.
Many existing companies are also adopting different models of engagement with home owners. Revenue sharing models, as well as a hybrid fixed rental plus revenue sharing model is also finding acceptability amongst homeowners.
Some of the existing players are introducing new verticals targetted at premium user, moving away from the usual ones focused on college and university students. For instance, Zolostays has recently entered the luxury hotel space, with the launch of Hotel Z Triloha, in Bengaluru.
Zostel, another early mover in the sector, has also ventured into premium offerings. The firm is planning to add Zostel Homes internationally. The company which currently runs over 80 properties, will add 25 properties in the next two quarters, and a total of 500 properties over the next three fiscals.
“Most co-living companies are now looking at profitability over scale. The desire for people to travel, live, share spaces with like-minded communities is only growing. Right at the time that co-living started picking up in India, focused communities have picked up in Western countries. That is the way the Indian market will also go,” Pokharna said.