Lahore-based coworking space startup Colabs is set to roll out a SaaS product to enable businesses to meet back office needs, including business registration, talent sourcing and management, payroll processing, and legal and tax compliance. It also plans to hire more staff, including an expansion of the product team for its SaaS workspace service coming out of beta.
The new plans come after the startup secured $3 million in seed funding in a round led by Indus Valley Capital, Zayn Capital and Fatima Gobi Ventures, the first time the three Pakistan-focused VCs are investing in a startup together.
Omar Shah, co-founder and CEO of Colabs, a former investment banker, told thenewsupdate: “We realized that people setting up operations in Pakistan need different services; they need help setting up businesses, processing payrolls, and tax compliance. That’s why we introduced our business solutions.”
“Our plan is to reach 600 paying customers in the next 12 months, and from there we will bring this product to market,” said Shah.
Mr Shah and his twin brother Ali Shah co-founded Colabs as a co-working outfit for entrepreneurs starting businesses and multinationals setting up hubs in Pakistan. This was in 2019 and they were inspired by the thriving startup ecosystem and advancing technology space in the country.
Before launching Colabs, Mr. Shah spent about eight years in the private equity industry, with his last assignment at Abraaj Capital, before teaming up with his brother, who runs the long-established family business, SABCON, to launch the startup. The family business develops Colabs spaces.
Planned National Expansion
The startup houses more than 100 companies employing a total of 1,200 people in three locations in Lahore. It plans to open 100,000 seats across the country over the next five years in a nationwide expansion to major cities, including Islamabad and Karachi.
“The idea for Colabs is to create spaces across the country where we can serve freelancers, startups, SMEs and large enterprises. It is a community for anyone who wants to start a career or a business or enter the country. Colabs will support them in their journey. We want to become that gateway to Pakistan,” Shah said.
“Our growth plan is very ambitious. But we see a demand for what we offer because by the time we open our new spaces they are already sold out. And this is because so many companies are entering the country. And so many startups here that are raising capital and wanting to be in spaces like ours, rather than investing in their own campus,” he said.
The rise of flexible workplaces has also grown after Covid as more companies reduce the overhead costs associated with operating exclusive physical locations. These co-working spaces like Colabs also host events that are important for networking, learning or meeting potential investors or clients.
According to Shah, the increasing interest in Pakistan from major investors like Tiger Global means the growth of the country’s startup ecosystem will continue, increasing demand for spaces like Colabs. Investments in Pakistan rose more than fivefold last year to $350 million from $65 million in 2021 amid a fintech and e-commerce boom.
Colabs’ new funding brings the total amount raised by the startup to $4 million, including capital from an unannounced pre-seed round.
Aatif Awan, founder and managing partner of Indus Valley Capital, said: “We are excited to partner with the Colabs team to help them build the industry-leading platform and community that will drive the growth of Pakistani technology among startups , freelancers and international companies expanding into Pakistan.”
The seed round was joined by Shorooq Partners, Kinnow Capital, Muir Capital, Sai Ventures and some key angels including Turner Novak, William Hockey and Teddy Himler.
Zayn Capital co-founder and managing partner Faisal Aftab said, “I have seen Colabs up close as one of the key players in Pakistan’s startup ecosystem. We were lucky enough to meet some of the startups we have invested in in their spaces.”