Profitable, growing chain of regional coworking spaces. Three year track record.
- London, United Kingdom
Categories: Property Non-Digital Mixed B2B/B2C
There are many coworking spaces in major cities like London – but very few in the rest of UK. We think there is an opportunity to create a chain of coworking spaces outside Central London.
We believe the high-end, high-capital model common in Central London is not optimal for the rest of the UK. Like hotels, restaurants and coffee shops, there is an opportunity for a mid-market chain. Premier Inn and Pizza Express not The Ritz and Le Gavroche.
We have developed a much lower capital model. After operating two temporary spaces in London we opened a site in Bristol on a ten-year lease. Our Bristol site was profitable just four months after opening*.
The way we work is changing - creating demand for coworking spaces, a new type of space designed for flexible working.
DeskLodge operates a 24,000 sq ft site in Bristol, another opening in Hemel Hempstead - and with your help, more to follow.
*source: unaudited management accounts
DeskLodge: Making work an adventure.
DeskLodges offer a wide range of different places to work under one roof.
They have a fun, adventurous feel - with a focus on productivity. Strongly themed environments are designed to make work enjoyable again - from big kitchen tables to bar stools to informal meeting spaces.
We believe that DeskLodges let small companies offer staff access to a work space which would be expensive to create themselves.
They let companies work more collaboratively with others and to grow much more flexibly with lower costs - only paying for the time their members use the space.
Substantial accomplishments to date
DeskLodge operated a temporary location at Kings Cross for 2.5 years. This started as 6,000 sq ft and grew to 12,000 sq ft.
The profits from King's Cross plus £150,000 debt from Funding Circle allowed DeskLodge to move to a 12,800 sq ft location in Bristol.
This opened in August 2015 and was profitable within four months of opening.
Note from Regus report: They expect their sites to take four years to reach maturity.
We take cheap space, make it attractive and let members use it at a good margin.
DeskLodge members get a range of benefits including fresh ground coffee, friendly customer service, networking, events, varied places to work or meet and great wi-fi.
We offer memberships from £10 to £320 per month. Users can also pay by the hour (Bristol is £3 per hour up to £20 per day).
NOTE: Tom Ball is the founder of two separate companies:
NearDesk is a card and mobile app which lets users rent office space by the hour from 300 UK locations. NearDesk does not operate any spaces.
DeskLodge currently operates one of those spaces, using NearDesk software on standard commercial terms to do so.
Use of proceeds
Opening more locations:
* Bristol – extension of existing site (using funds from this round)
* Future sites not yet announced
Each location requires:
* Rent deposit
* Operating costs until site is profitable
**There is an outstanding loan of £133,000 held by Funding Circle. The funds raised will not be paid to reduce this loan.
Small companies (2-50 staff) wanting flexible space for their staff to work (for example to allow rapid fluctuating demand - with 20 staff needing space one day and 10 the next).
This is complemented by freelancers and consultants who use the common areas in a variety of ways (Some with unlimited access, some with a membership for a certain number of hours each month, others paying as they go).
Characteristics of target market
Our market is primarily smaller companies and freelancers
- 4.08m self-employed & sole proprietors generating £237bn turnover
- 1.07m businesses employing 1-9 employees generating £435bn turnover
- 203.5k businesses employing 10-49 employees generating £543bn turnover
- Combined turnover of all SMEs’ (0-249) was £1.8 trillion, 47% of all private sector turnover in UK
Our future members are currently working in a range of places including:
- A rented office
- Coffee shops
- At home
- Direct competitors: Other coworking spaces
We believe that coworking spaces attract members by offering a flexible place to work that is designed for working - and has a community of like-minded people.
In Central London there are many great flexible work spaces, offering a range of options - but, in our opinion, there are fewer coworking spaces outside Central London.
Core to our marketing strategy is to build a product worth talking about - and then work with existing networking groups to let them host their events in our space.
We believe we are building a product which stands out in ways that matter to our target market.
In Bristol we let a number of local groups host their networking events in our space. This brings potential new members into the space who also help spread the word.
We also use social media to target local prospects and connect with local networking groups and we work with brokers.
Our differentiation against other coworking spaces is location, price, layout and brand.
Location: Coworking operates in very local markets - we think our competitors will be those in the same town. Currently most towns/cities we are looking at have no real competitors - but we expect that to change over time.
Price: We believe that price is very important to freelancers and small companies - and so work hard to minimise our costs (see just below) rather than operating at the top of the market - as exemplified by coworking space operators like Regus, WeWork & SecondHome
Layout and brand: A wide variety of strongly themed work environments are available to all members. This theming gives us a strong brand - which has attracted many members to date.
Operationally, there are three key reasons why we have been successful to date, all based on our understanding of the market:
1. Lower capital model: Cheaper ugly buildings, secondary locations, lower-cost but attractive fit-out – which give better terms (lower rent, longer rent-free) and reduce capital requirements
2. A strongly differentiated offering which attracts loyal users and reduces price pressure. This seems more attractive to users – giving more revenue per user and higher occupancy
3. We operate more efficiently – fewer square feet per user, lower costs per square foot and fewer staff per centre through smart use of technology