One More Corona Casualty: Founders House is Closing Down

It’s almost 10 years since Founders House opened its doors as the first tech coworking space in the Nordics. Since then, hundreds of entrepreneurs have built their tech businesses from there, greatly aided by the camaraderie, mutual help, introductions, friendships, strong coffee and investors extended by the Founders House network.

For years it was Copenhagen’s first point of contact for international startup visitors and investors, and after the move to Njalsgade and co-creation of Startup Village it became the largest concentration of tech startups in the country. We’ve been fighting to keep it going but corona has proven too big an adversary. Combined with to existing space challenges this marks the end of Founders House.

As a founder, I’m left with oceans of great memories, but also a feeling of sadness and loss. I left the operational day-to-day of the company almost two years ago, but have remained a co-owner and sit on the board of both the Danish and Norwegian holding companies in Mesh Community. I’m grateful to Frederik, Enrika and the current team, as well as previous team mates such as Kasper Smidt and Zenia Francker for making this a unique and wonderful place to work.

What happened?

Founders House was a small business and that left it fragile. 1,700m2 is really too small for a coworking space to be profitable, so for the last four years we’ve been trying to find more space in Startup Village to expand with a public café, more offices and a large event space - but with no luck. A small company in a tight margin industry is vulnerable so when corona struck the company was heavily affected despite only a small decrease in occupancy. Most members actually continued their memberships during first corona wave, but sadly that wasn’t enough.

In more fortunate times Founders House’ loss could have been covered by its sister company Matrikel 1, which was opened three years ago. Matrikel1 is a larger business with 7,000m2 which has been virtually sold-out of offices since day one.

But circumstances at Matrikel 1 tough too. Matrikel1 earns almost 40% of its revenue from hospitality as it runs a public café, extensive event venues, a club and employs a full team of chef, waiters and event staff. These units were mandatorily closed down during corona for which the company was expecting public compensation of the fixed expenses (rent on Højbro Plads isn’t cheap). But it turns out that because the company isn’t purely a hospitality business (it’s also a work space business) it doesn’t have the right official industry code, so our hospitality business isn’t automatically considered to have been forcefully shut down.

This meant a compensation evaluation on an individual basis, in which Matrikel1 ‘s loss is measured as a drop in revenue compared to same time last year (rather than compared to budget). But last year Matrikel1 was only half the size and had only half the revenue. Since then the business doubled in physical size – and in fixed expenses! The lack of compensation for fixed expenses - and an ongoing ban on events with more than 50 people - means that Matrikel1is is in no position to cover the loss from its sister company.

Matrikel1’s problems with compensation is shared by hundreds of startups, hotels and other mixed and growth businesses. Because the formulas used to qualify compensation favor steady historical data, it is negatively biased against venture backed or other growth companies that invest more than they earn.

Who was there?

During the years Founders House was the home of lots of wonderful people and companies. Among them Shape, Labster, Upbeat , Iconfinder, Realm, Voi, Conferize, Nappy, Astralis, B-metric, Woomio, Tmrow, Onomondo, Driversnote and too many more to be able to mention.

Startup Village included Vivino, Autobutler, Planday, Graduateland, Churchdesk and many more.

Thanks to all of you for champagne parties in good times and mutual support in bad.

What now

Right now all current members at Founders House are being offered memberships at Matrikel1 and we hope to be able to help most of the companies with new offices, desk space and community before Founders House will physically close down at the end of the year. The company also expects to be able to meet all its financial obligations. As Founders House also administered Startup Village this administration will also cease, unless some of the resident startups in the area pick up the baton and continue the network. We hope that many alumni, previous members and friends of the house will continue the relation by getting a free connect membership at Matrikel1, which keeps you informed and connected to the family.

The holding company, Mesh Community, will retain ownership of the brand and hope that the future brings an opportunity to build a new Founders House in a large building suitable for the needs and wants of entrepreneurs today. But first the focus is on helping the members of Founders House find alternative office space, and on helping the rest of the business to survive corona.

With love, fond memories and sadness

Tine

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