Saturday, July 3, 2010

NWC2.0 -- New Work City 2.0

Here are two emails came through from the Coworking Group with exciting news for New York City based New Work City, but also highlighting interesting approaches to funding for coworking spaces, the coworking world (coworkers, space owners, and those who plan to have their space) will enjoy reading about:

The first email is from Alex Hillman, a co-founder of Philadelphia-based coworking space, Independence Hall (aka IndyHall). And the second email is from Tony Bacigalupo, the owner of New Work City (aka NWC) in Manhattan.

Here we go:

Alex Hillman  |  Jul 02 10:15AM -0400

For those who haven't heard, New Work City (our coworking friends in Manhattan) have announced a big move: Tony Bacigalupo's Blog Post

Manhattan has some of the most challenging real estate economics in our country and Tony has done a good job of keeping a bootstrap mindset and always coming up with creative ways to overcome the challenge while keeping their growth and approach organic.

Their latest move includes not only the usual high costs associated with space in NYC, but renovation costs as well. I was impressed by one approach they took to financing their move and build-out:
Darrell Silver's Blog Post

In short, and Tony can feel free to correct me here, one of the long time members/supporters they have invested cash in return for ownership of a few memberships...memberships that subsidize his company's costs of having a workspace in Manhattan. When New Work City can afford to (it sounds like there is a goal of one year), they will buy those memberships back from Darrell.
"I don't know the details of this deal beyond what I've read on Darrell's blog."

I don't know the details of this deal beyond what I've read on Darrell's blog, and Tony has a lot on his plate with opening a new location in 2 months, but I was particularly impressed with the creative approach to
financing and thought that instead of just ask him for more info on my own time, he could share with all of us at once. :)

When IndyHall performed its similar growth/move last year, we also raised money from within our membership in the form of a loan. This isn't completely dissimilar, but the tone of the exchange is more organized and mutually beneficial, I almost wish we'd thought of it ourselves!

The main reinforcing concept that I see here are mutual benefit of having members bought in on a much deeper level than renting desks.

coworking in philadelphia

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Tony Bacigalupo | Jul 02 08:37PM -0400

Alex, thanks for bringing this up... I figured someone would beat me to spilling the beans about our new space on here :)

NYC is indeed a very difficult place to build a coworking space while keeping it truly community-run. Point of fact, many of the proto-coworking spots that have appeared in NYC in the past few years have been directly or indirectly tied to external interests.

My goal with NWC was to keep us truly independent and self-sustaining.

The deal in our new space was the closest we were ever going to get to a perfect storm of all the right factors: location, price, size, environment, timing, and, most importantly, a landlord who was on board with what we're doing.

The special deal you're referring to was Darrell's idea, and it was a really smart one (he's a really really smart dude). It works out really well for both of us-- he saves a bunch of money for his startup in the form of free
memberships, while we get the benefit of both a critical infusion of early cash as well as a group of great guys to help fill up our big new space.

By the time their free occupancy starts to really hurt our bottom line, we'll be generating enough cash flow to start paying off the loan-- and by then, Darrell and his team would have gotten enough benefit to justify the
risk of the loan.

Darrell also, of course, wants to support us, and he knows that the economics of starting up a coworking space in NYC is damn near impossible if you don't have some help.

So his help was the critical piece I needed to feel comfortable signing the lease.

That being said, we still have a very, very long way to go. To pay for what will be a very significant amount of construction and outfitting, we are going to have to pull out all the stops.

My aim is to go for the most community-reinforcing routes first. We'll be taking a lot of membership prepayment (two of my members have already paid for six and twelve months respectively, before I even started asking), that being the best money since it is sourced by the community itself and represents commitments on the part of the members.

Next up is loans from individuals who are willing to take a little risk to help make it all possible. They will be simple loans with low interest rates and long repayment terms; in other words, these are going to be loans from people who don't care so much about making a cash ROI as they do with helping us succeed.

Beyond that, I anticipate that we will still have a significant gap to close-- we're looking into sponsorships, partnered programming, auctioning off members' services, taking money for dares, and more.

I'm not going to lie, I've had my share of panic attacks about all this. But we hit a point at which it was clear that we were as close as we were ever going to get, and I decided that we were close enough that I could rely on rallying the community together to figure out how to get across the finish line.

So far, I've already been pleasantly surprised by the dedication and support of some of my close friends in the community. If we catch a few more breaks, we'll be there.

And then we're going to have something that never could have existed in NYC otherwise-- a true community center based on coworking. The impact we're going to have with this new space is going to be well worth the hard work and risk that are going into it.

We are the future, people.

Much more to come! Would love some help on creative fundraising ideas.

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