Coworking space provider Sandbox finds its niche as a startup hub

• 15% increase of active monthly members from 2022 to mid 2024 period
• Investor gave US$318k in 2021 to launch 2nd location in Bandar Sunway

While traffic conditions in the Klang Valley provide clear proof that the work from office pre-pandemic norm has reasserted itself, that does not mean that the concept of the office has not changed.

For instance, the demand for coworking has improved after the pandemic, said Casper Foo, co-founder of coworking space Sandbox launched with his co-founder, Lye Yu Min in 2017 in Sri Petaling, a township in Kuala Lumpur. There was a third co-founder then and the trio self-funded the venture to the tune of US$63,705 (RM300,000). The third co-founder soon left to pursue other interests. 

The pandemic had clearly shown the downside to the traditional approach of work with a fixed space and locked in contractual commitments to pay rent becoming a burden. Many businesses faced significant cash flow problems. 

In the post-pandemic era, renting an office is still about signing the traditional two year lease and then spending on renovations.

“More people now prefer coworking spaces due to the flexibility offered,” Casper said, adding that people are scared of this commitment because during Covid they learnt that “cash is king”. “Now whenever you start a business with all the competition out there you don't even know whether you're going to be successful. Which is why it's very good to choose a coworking space to start as your first office space,” he said.

Today, one can start at a coworking space, and next month, if you don't think your idea is good enough, can close down the business and exit coworking without worrying about the lease and renovation costs, Casper points out.

Found its niche

As a provider of coworking space, Sandbox is small compared to market leaders WORQ (eight locations) and Common Ground (10 locations), or other established players such as Colony (four locations), Co-Labs (five locations), Spaces (three locations) and Komune (three locations).

While market leader WORQ has been making news with collaborations with mall operators and real estate investment companies to expand its space offered, with established corporate players emerging as a new source of demand for coworking options, Casper believes he has found a niche with his 24/7 coworking space that attracts students, freelancers, remote workers, startups, and digital nomads.

“We are more like a startup hub, a stepping stone for people who start here very raw and new, sometimes just one person or even sometimes without an idea yet. So they have to ideate with a lot of testing in our space. That's why we call ourselves Sandbox,” Casper explained.

In 2022, having proven its target market was viable, Casper, with a US$318,400 (RM1.5 million) investment from a close friend opened a second branch in Bandar Sunway instead of the more popular coworking locations such as Bangsar South, Damansara, Bangsar proper or Subang. “Those locations are too formal and commercial for us,” he said. 

Before Sandbox

Before the idea of Sandbox, Casper had built a 10-year career as a financial planner in financial advisory services, while his co-founder Lye was a general insurance planner of 11 years. They have been friends since their time at Sunway University.

Casper never liked the idea of working in an office, choosing instead to work from a cafe, which gave rise to his interest in the coworking concept as he found it “very cool”, but also practical especially if one was an entrepreneur or a digital nomad. 

“Instead of working at the cafe alone or starting some project, you could get advice from others in the same community because the connection is really strong when you meet like-minded people.”

The trigger for launching Sandbox happened when Casper’s regular cafe that served as his office shut down without notice in 2017.
 

Sri Petaling and Bandar Sunway, and the neighbourhood feel

Picking Sri Petaling as the first location was easy. The founders wanted Sandbox to be in townships with a neighborhood feel. Sri Petaling also happens to be close to where they live.

“I also prefer areas slightly geared towards the younger demographic, because startups pretty much comprise the younger crowd, somewhere between the 20s to early 30s,” Casper added.

2017 was a different time for coworking spaces, as they were too expensive, said Casper. “When Sandbox first started out, our rates were low compared to our competitors.”

Today, after seven years in operation, prices have remained the same at the Sri Petaling location.

“We want to support these startups and people stepping into the entrepreneurial journey, because I myself previously, was looking for a coworking space but found it pricey. That’s why when we started I wanted to make sure that the pricing was comfortable for everyone,” Casper explained.

Its Sri Petaling branch reached a cash-flow break even six months into operations while Bandar Sunway took a year. Casper points to the gradual recovery post-pandemic for the longer time it took Bandar Sunway to achieve breakeven.

He is currently looking to hire some people to help grow Bandar Sunway’s events business. 
 

Tenants

While tenants have come and gone, especially during the pandemic, “Most people that leave our space are for good reasons as they grew too big for us to accommodate,” he said, declining to provide examples.

A team of four to eight is the standard capacity, but at one point, Sandbox was able to host a team of 30 people thanks to the second floor that they had expanded at Sri Petaling before the pandemic struck.

Sandbox currently hosts 70 to 100 active monthly members in each location. They consist of around 20 companies of between two to four people while between 20 to 30 occupants are freelancers. Occupancy has increased 15% since 2022 and the two locations see a monthly occupancy rate of between 65% to 80%
 

The future

Sandbox is applying for Malaysia Digital Hub (MDH) status, a government certification for coworking spaces that meet certain criteria that benefit their community of users to grow their businesses.

“We are actually in the midst of this process for getting certified,” Casper added.

In terms of future growth, “While we welcome investors, we also hope to grow this business organically because we want to maintain our model and style as a middle scale, community-driven coworking space,” Casper explained. 

Any investor keen to partner with Sandbox to expand to new locations must accept their brand identity. 

Beyond investors, Casper is looking for corporate partners. “We hope that we can partner up with more companies to synergise with us,” he said. It recently partnered with Asus which equipped Sandbox with its latest WiFi router technology.