In addition to how we've handled fundraising for Indy Hall (in which we haven't taken investment), I've raised a non-trivial amount of capital for our first steps towards a residential spin on Indy Hall. Both have taught me quite a few things.
1) We created an LP(limited partnership) to own/manage the equity generated by the new project. The LP is maintained by myself and our real estate development partners, and is structured similarly to a "standard" business partnership. The roles and responsibilities of our partners are clearly defined, and ours are as well. Our investors are non-controlling investors, trusting us based on our demonstration of traction and past history of success. That LP is also TOTALLY separate from Indy Hall's and our partners' LLC. This keeps Indy Hall's existing assets safe should something go haywire with the deal. 2) Be your own first investor. Since investors are essentially buying a piece of your traction, but there's no better way to keep your foothold than to invest yourself. In addition to the fact that I was a controlling partner of the LP, I contributed ~16% of the total capital raising goal. I would try to find a way to bring some % to the table yourself (friends and family). I had a personal goal of at least 10%, and thankfully was able to do that from savings. 3) Regardless of legal control, put yourself in a mindset where every investor becomes your business partner. This can be an advantage, especially when investors have more skin in the game than simply a financial investment, but it can also be a disadvantage. Money is a BAD reason to bring someone on as a business partner, even if you like everything else about them. Quick story: in Indy Hall's first growth/expansion, we had a member approach us about the finances. He was a great member, and believed in Indy Hall's future. He offered investment because he saw the opportunity, but we decided to take on the money as debt instead because money wasn't the right reason to bring on a new business partner. 4) Decide your terms ahead of time, and hold your ground. We had investors who we *really* thought was a good fit for the project, but he wanted all kinds of modifications to our terms. It ended up being a big waste of time and legal fees, and we ended up turning him away from the project. 5) Back to the first point about the LP, buying/building property is a completely different business than running a coworking space. We have an offer on the table from our landlord to buy the building we currently occupy in the next 2 years, which could be both lucrative and meaningful for our community, but I'm not in the business of being a building manager nor do I want to be. That's my choice - yours may be different. But in our case, among the MANY considerations is finding a partner who DOES want to be that building manager. 6) In this still-very-conceptual model for buying our current building, my goal would be to seed the investment pool (if not completely close it, though that may be too far of a reach) with funds from Indy Hall members and their connections. Basically, if we're going to take investment, my top priority is for it to be from people who already intimately understand the value we're creating and who want to help us share that value with others. In a far less conceptual reality of now, every penny we've ever BORROWED (and a significant portion of the money we've raised from investors) came from people who've already been impacted by Indy Hall - in most cases, in a financially positive way - and are looking to reinvest that in a way that will benefit themselves and others. Actual conversation I've had: "being a member of Indy Hall helped me make $XX since joining. I want to put that towards the future of the thing that helped me get here, so that it can keep helping me advance." -Alex -Alex -- /ah indyhall.org coworking in philadelphia On Tue, Aug 20, 2013 at 12:22 PM, Craig Baute - Creative Density Coworking < [email protected]> wrote: > Hey team, > > I have been approached by three different investors in the last few weeks > for new locations. Creative Density is looking at a second location and > building up the new community for it in a simlar way to how we did it two > years ago. It's very grass roots and will only happen if the community can > be formed before the space opens. Once this process started to happen > that's when investors started to show up. > > I know several others have had similar experience so I am hoping I can > have guidance about important questions to ask and possible structures. > > What I'm thinking: > > Business structure: > Creative Density's current location remains my own domain. They don't get > a chunk of that but they are investing in future locations with the new > location being a new business entity. We will share access to my > intellectual property but in case of a split I will retain control in a > reasonable time frame of transition. > > How much money: > They are looking to purchase the building and renovating it. I'm working > on how much money they need to put in beyound that and how to split revenue > and profits. > > Do they have a good personality match and complimentary skill set? > I'm laying out my principals of what I want coworking to be and that > profit is not the sole driving force. Yes, we want to make money but we > also want this a platform and community that supports freelancers and > remote workers as well as small teams. Private offices sell fast but they > can not dominate the space and must be around only a third of the space. > They do have a good skill set that compliments my own as an experience > coworking space owner. > > Any advice would helpful. > > Craig > > > > -- > Visit this forum on the web at http://discuss.coworking.com > --- > You received this message because you are subscribed to the Google Groups > "Coworking" group. > To unsubscribe from this group and stop receiving emails from it, send an > email to [email protected]. > For more options, visit https://groups.google.com/groups/opt_out. > -- Visit this forum on the web at http://discuss.coworking.com --- You received this message because you are subscribed to the Google Groups "Coworking" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/groups/opt_out.
