The Coop, a 5,500-square foot coworking space in River North, has been acquired by NextSpace, the California-based owner of multiple coworking centers making its first expansion outside of its home state.
Chicagoans Sam Rosen and Pat Griffin started The Coop about four years ago to provide flexible working space for freelancers and professionals. The two also run a Web development shop called One Design Company and a startup called Desktime, which makes software to manage coworking centers. Since its inception, The Coop has doubled its capacity to 60 desks and upgraded its furniture.
"We came to the conclusion that it was time -- we needed to do what was best for The Coop, which was to sell it to someone who could really focus on it and grow it and make it an even better community," said Rosen, who will be turning his attention toward building Desktime.
Santa Cruz, Calif.-based NextSpace was co-founded by former Santa Cruz Mayor Ryan Coonerty; Jeremy Neuner, the city's former economic development manager; and Caleb Baskin, a local attorney. They opened their first coworking space in 2008 and now run six locations in the Bay Area and two in Los Angeles. NextSpace was already interested in expanding nationally when Rosen and Griffin approached their counterparts about buying The Coop.
NextSpace executives decided they were "confident that Chicago and the Midwest in general (was) a good place for us to establish our next beachhead," said Neuner, the company's chief executive.
Terms of the acquisition, which closed in early July, were not disclosed. The Coop will be renamed NextSpace River North and its membership and pricing structure will eventually be adjusted to be consistent with the company's other centers. Neuner said pricing should not change drastically with the transition.
Membership rates at The Coop start at $20 for a daily plan that covers regular weekday working hours. A monthly membership, which allows 24/7 access during every day of the year, costs $350. NextSpace offers a broader range of membership levels, including conference room rentals and private offices that can house a group of coworkers and cost upwards of $2,000 a month. The company will add several private offices to The Coop.
"We want to be really deliberate in (taking over The Coop) because there is such a great community identity there." Neuner said. "We want to honor that."
NextSpace also raised $500,000 in funding from Chicago-area investors such as Jeff Carter, co-founder of Hyde Park Angels and manager at West Loop Ventures; and Lakewest Venture Partners, an investment group that consists of contributions from real estate developer Buzz Ruttenberg and partners David Mann and Jonathan McCulloch. Lakewest typically invests between $100,000 and $500,000, focusing on early-stage technology companies "that are not quite ready for a traditional (venture capital) firm but beyond the capacity of raising from friends and family," Mann said.
Lakewest Venture Partners has invested separately in Desktime, and Mann said theinvestors are interested in coworking as a business concept.
"There's a new innovation economy here (in Chicago) and NextSpace seems to be the exact kind of player poised to foster that kind of economy and prosper within it," Mann said.
Rosen said Desktime, while not yet profitable, is growing and will be getting a bigger marketing push. The online platform has listings for coworking spaces in 370 cities in more than 50 countries, and Desktime takes a cut of revenue when bookings for space are made through its system. In addition, 20 coworking spaces around the country use Desktime for internal management of their centers.
Rosen said he expects 150,000 square feet of additional coworking space to open in Chicago over the next year. And Neuner said NextSpace is interested in opening two or three more Chicago locations. One of NextSpace's Bay Area centers has an attached childcare facility for members who are on site for the day, a model that could be transferable to suburban locations.
Neuner said he wants to keep building communities of professionals for whom "work is more of a verb than a noun and a place that they go."
Rosen, for his part, wants to see the collaborative community he helped foster at The Coop continue.
"Independent workers and the type of people who work in coworking spaces can work anywhere," he said. "They can work from their beds, from Starbucks, from the sweet cafe by their house where the barista knows their name ... (But) the reason they come to work at The Coop is the people, bottom line."
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