Financing, Investment

[mique]

I'm just curious to know if anyone has come up with any creative or
original ideas relating to financing your initial investment.

The way I see it, Coworking in and of itself is not a tremendously
profitable enterprise, but more a community service and a great way to
foster networking. Renting and fixing a space however is pricey. How
did some successful Owners gain the capital to take the plunge and
then make the business profitable?

Just wanting to start a discussion on the topic!

[Alex Hillman]

At IndyHall we built our model to essentially allow our potential members to seed the capitol we put up. By allowing them to pre-pay for up to 6 months ahead, we got longer term buy in, as well as buffered the cash that I had to put up myself otherwise.

This obviously requisites that you HAVE a substantial body of potential members to turn to, but that's just one more reason that we so strongly encourage people to build community first!

-Alex, IndyHall


--
-----
--
-----
Alex Hillman
im always developing something
digital: al...@weknowhtml.com
visual: www.dangerouslyawesome.com
local: www.indyhall.org

[Tara Hunt]

At Citizen Space, we made sure the rent of the space and the initial investment into setting it up (~$10,000) was something that Citizen Agency could personally afford. We knew if we went into something that was over our heads, that all we would think about was how to pay for it. Because we got something affordable - even if nobody showed up, we would be okay - we could concentrate on the more important stuff: community and providing a haven for vagabond hackers. :)

T

--
tara 'missrogue' hunt
coFounder
Citizen Agency (www.citizenagency.com)
blog: www.horsepigcow.com
phone: 415-694-1951
fax: 415-727-5335

[axon]

At Uptime, we were already planning on leasing some space that came
available adjacent to our offices, to create a networking event
venue. Since then, we've developed a business plan for a coworking
studio, and we've secured funding for the buildout, furnishings,
network infrastructure, etc., from the local workforce investment
board. We're also partnering with the university here and their
career center. They're launching a program to place interns with tech
companies located in Silicon Valley, but have them work from Chico --
at Uptime!

--Ax

On Aug 5, 10:13 am, "Tara Hunt" <horsepig...@gmail.com> wrote:
> At Citizen Space, we made sure the rent of the space and the initial
> investment into setting it up (~$10,000) was something that Citizen Agency
> could personally afford. We knew if we went into something that was over our
> heads, that all we would think about was how to pay for it. Because we got
> something affordable - even if nobody showed up, we would be okay - we could
> concentrate on the more important stuff: community and providing a haven for
> vagabond hackers. :)
> T
>
> On Tue, Aug 5, 2008 at 9:15 AM, Alex Hillman

> <dangerouslyawes...@gmail.com>wrote:

>
>
>
> > At IndyHall we built our model to essentially allow our potential members
> > to seed the capitol we put up. By allowing them to pre-pay for up to 6
> > months ahead, we got longer term buy in, as well as buffered the cash that I
> > had to put up myself otherwise.
>
> > This obviously requisites that you HAVE a substantial body of potential
> > members to turn to, but that's just one more reason that we so strongly
> > encourage people to build community first!
>
> > -Alex, IndyHall
>
> > --
> > -----
> > --
> > -----
> > Alex Hillman
> > im always developing something

> > digital: a...@weknowhtml.com
> > visual:www.dangerouslyawesome.com
> > local:www.indyhall.org

[Steven Heath]

The way I see it, Coworking in and of itself is not a tremendously
profitable enterprise, but more a community service and a great way to
foster networking.  Renting and fixing a space however is pricey.  How
did some successful Owners gain the capital to take the plunge and
then make the business profitable?

As far as I could tell two broad ways of funding can occur:

Bottom Up
Top Down

The first is a number of people get together and agree to pay X and once enough people have committed the funding can be used. This i s a very co-operative way but also takes trust among everyone and I would think harder due to time and everyone agreeing on the key parts (location etc).

The other Top Down is one person/company funding everything and taking a 'punt'. Just as Tara said in her post I took this approach and have funded the setup and signed the year long lease in my company name. I opened on August 1st and already have 6 paid up people.

I can afford the start up costs out of my own consulting business and I thought it would be a great thing to have in Wellington (New Zealand).

Take care

--
Steven Heath
Director
Foxbane Consulting
Cell: +64 21 706-067

Interested in Coworking in Wellington? Check out www.altspace.co.nz

[Derek Young]

At Suite133 we started with three main partners with their own core businesses. We found an office that we could afford if absolutely nobody showed up. We built it as a coworking space. However, plan b would be a really cool office for ourselves. We personally funded the initial startup costs, then hoped others would come in the door. I will also add that to lower the lease costs and gain commitment from clients, we signed a fairly long lease with several extensions. We could be here a really really long time if we wanted.

Secondarily, like someone else added, we have perks for prepaying. Our space is relatively limited because of its layout. So, we’ll provide a file cabinet if somebody prepays. We’ll provide bar gift cards for the tequila place around the corner and other little perks for those that pre-pay. Our first six clients all prepaid. This helped tremendously. This hasn’t been as relevant lately, but it did help in the early days.

Derek Young
Suite133
Tacoma, Washington

On 8/5/08 1:39 PM, "Steven Heath" <she...@gmail.com> wrote:

[Jacob Sayles]

Office Nomads is "Top Down" as you put it.  Susan and I loaned the startup money to ourselves and we spending that as we move towards profitability.  Of course we were also pretty "Bottom Up" too focusing on building the community before we pulled the funds.  In my case I refinanced my house so I wanted to make sure folks were interested before I made the plunge.  

Jacob

-- 
Office Nomads - Individuality without Isolation
http://www.officenomads.com - (206) 323-6500

[Ian Graham]

Financing for theCodeFactory was done in a similar manner to Office
Nomads. First step is to get actively involved in the local community
“Bottoms Up” for fun and then realized there is a strong community and
potential market for the space.

Next step “Top Down” was a two step process; get a loan for physical
assets and find a source of working capital for operating expenses
(rent, internet, coffee, janitorial, ...). There is a great program
in Canada called the Canadian Small Business Financing Program (http://
www.ic.gc.ca/epic/site/csbfp-pfpec.nsf/en/home) which is a good source
of money for hard assets and the government shares the risk for the
loan. Next step is to find some working capital, best of luck to you
in this regard. For working capital I loaned the money to the business
from a personal line of credit secured with my home. If you are a new
business your personal credit rating is huge and will basically form
the basis for getting any sort of money from the bank. The best advice
I could offer is try to avoid offering a personal guarantee if you
can.

So in summary get a loan for your assets; furniture, computers and
other STUFF, this is fairly straight forward. Find a source of working
capital which is much harder to do because this isn’t secured with
anything. Do whatever you can to preserve your working capital.

Ian
www.thecodefactory.ca
613.321.3831

[Colin Loretz]

I just looked at a wonderful potential space for Reno Collective,
however, everything is now coming down to a matter of financing.

We absolutely fell in love with the space but it is in need of being
completely built out. I spoke with the owner and he mentioned that it
will cost at least $30,000-$40,000 on our end to get the place going
and then we can work out a monthly rate for the lease. Holy cow!

I'm working with the local development authorities and government
offices to get funding for "providing downtown redevelopment and
keeping young professionals/business in town." Has anyone had success
in getting funding from the Small Business Administration or local
Small Business development centers?

The cost to get this place in serviceable shape is high but I think
the space would be worth it.

Here is a picture of one of the corners, as you can see, it needs a
lot:
http://flickr.com/photos/colinloretz/2862460467/

- Colin

On Aug 5, 9:10 pm, Ian Graham <i...@thecodefactory.ca> wrote:
> Financingfor theCodeFactory was done in a similar manner to Office

> Nomads. First step is to get actively involved in the local community
> “Bottoms Up” for fun and then realized there is a strong community and
> potential market for the space.
>
> Next step “Top Down” was a two step process; get a loan for physical
> assets and find a source of working capital for operating expenses
> (rent, internet, coffee,  janitorial, ...). There is a great program

> in Canada called the Canadian Small BusinessFinancingProgram (http://www.ic.gc.ca/epic/site/csbfp-pfpec.nsf/en/home) which is a good source

[Jerome Chang]

SBA will most likely not give you the $ - I tried last year.  They deem our "business" as passive income, even though it operates similar to a fitness gym.  There's the possibility of proving more than 50% of your revenue comes from "active" income, such as retail sales (of paper, etc.), but I think that'd be tough to set up and not really your core business.

Jerome

______________
BLANKSPACES
"work wide open"

www.blankspaces.com
5405 Wilshire Blvd (2 blocks west of La Brea)
Los Angeles, CA 90036
323.330.9505 (office)