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Landlords are trying not to rent to startups in San Francisco

42floors.com

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Re: Landlords are trying not to rent to startups in San Francisco

#261

Post by qq66 »

flashman wrote: post #185
AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

How likely is a startup to trade points for office space? As in, a different class of VC which backs the company not with cash but with a location.

Startups already trade points for office space, by selling points to investors and using the proceeds for office space (among other things.

Re: Landlords are trying not to rent to startups in San Francisco

#262

Post by RollAHardSix »

AlexeyMK wrote: post #158

One solution that is not being discussed is for VCs to offer office space for start-ups. VCs have longer time-horizons (a typical VC fund will be spent over 5 or so years) and appear more stable to landlords. In addition, one of the toughest problems for VCs as I understand is dealflow - when it comes to a super-competitive round, Andreessen or Sequoia will often push other VC firms out of the round by throwing their…

It's certainly an interesting idea, and I have to admit it's one I've pondered over in the past as being an 'opportunity' for a small competitive advantage in closing a deal.

The biggest problem is capital tie-up. Buildings are expensive, in Cali, they are even more expensive. I've always wanted to try this idea though, perhaps in a large converted-warehouse or even a traditional down-town office-space somewhere like Austin.

Again though we must ask ourselves, what's more likely to help a start-up, office-space (in a time when more and more companies are moving towards virtual working arrangements), or an additional 100k/200k? Just some food for thought, like I said, if done right, it could be a very good perk to offer, but it's hard to justify the cost.

Cough And, shameless self-promotion, I'm looking to move into the VC space in an entry-level analyst/associate position if anyone has any exciting opportunities. Or even boring opportunities, I like boring too. :)

Re: Landlords are trying not to rent to startups in San Francisco

#263

Post by prostoalex »

davemel37 wrote: post #258
prostoalex wrote: post #247

Earlier quoted context omitted.

The high rent problem emerges only when the market is over-heated, and subsides when there's a correction. Anybody doing that would almost certainly be buying high and left holding the bag when an economic downcycle arrives.

I disagree. The same way a VC expects a few investments to cover the rest...they only need one rrapidly growing company to cover a downturn. Any VC fund that doesnt diversify their investments to cover market movements wont survive very long. Plus, even with a bubble bursting, commercial real estate in prime locations will retain much of its value. It will definitely outperform the startup market.

Are we talking about owning or leasing and then sub-leasing?

VCs that plan to use LP money to own and operate a commercial real-estate project are likely to get a "no, thank you", as LPs have access to REIT sector with much better purchasing power, IRRs, cashflows and operator experience.

If the VC firm is leasing and then sub-leasing, the reverse selection bias works against it, as the rapidly growing company is going to be the one moving out the soonest, needing higher square footage and shopping around for entire floors (or buildings, or campuses) will give it much better rate per square foot.

With that said, if anybody was doing it, it would be A16Z, considering how much Silicon Valley land and commercial real estate belongs to Arrillaga family.

Re: Landlords are trying not to rent to startups in San Francisco

#264

Post by klean92 »

mooreds wrote: post #170
pkulak wrote: post #146

Earlier quoted context omitted.

That's how you do it. Rent a tiny space in SF for your token SF people, then open offices in Portland, Boulder, Austin, etc. You're still an SF company, but your runway is twice as long as everyone else's.

This strategy needs a name. Maybe "The SF funding tentacle"?

The siphon

Re: Landlords are trying not to rent to startups in San Francisco

#265

Post by chrismarlow9 »

mbillie1 wrote: post #103
stephengillie wrote: post #25

Earlier quoted context omitted.

If all of your employees are remote, what do you show your investors, partners, board members, and creditors when they want a tour of your facility? How do you show them that you've got smart people working on hard problems? For some (bad?) startups, this is an even more valuable function of engineers than engineering.

> For some (bad?) startups, this is an even more valuable function of engineers than engineering. How on earth is this healthy? If your "company" continues to exist by sucking up investment money gained by doing a song-and-dance with a group of folks in an office, but never churns out a product, this is success? Good lord.

Welcome to the valley.

Re: Landlords are trying not to rent to startups in San Francisco

#266

Post by klipt »

kspaans wrote: post #254
owyn wrote: post #239

Earlier quoted context omitted.

At that income level, the federal tax is %28 and CA is %9.3, so about %37 yeah. Max is 33+12 = %45. There's also ~9% sales tax in most parts of california but every time you go out you better tip %20. And for all that, we get to pay for our own health care and retirements too!

I said effective tax rate not marginal tax rate. It looks like US and CA income tax has brackets, so even if your marginal rate is 37% you won't be paying that rate on 100% of your income. That said, I'd believe that if you include expenses like health care your net pay would be ~40% less than your gross pay. :P

Don't forget social security taxes - flat 6.2% on your first $118.5k of earnings: http://www.ssa.gov/pubs/EN-05-10003.pdf

Re: Landlords are trying not to rent to startups in San Francisco

#267

Post by pgeorgi »

justinator wrote: post #255
mooreds wrote: post #215

Earlier quoted context omitted.

It might be hard to get hired writing perl in Boulder (I checked out your profile) but if you're interested in other languages, I can do some intros for you. Or you could always move to Amsterdam: http://blog.booking.com/

Having visited Amsterdam, I'd be curious to live there on a permanent basis, although I am also in love with mountains (which the entire country lacks...) - as I think a lot of people who end up in Boulder can relate to. Booking does have a somewhat strange reputation when it comes to their coding style, I'm not sure if I could really come on board fully with their workflow. Ha. I haven't gotten a Perl job in Boulder…

> although I am also in love with mountains (which the entire country lacks...)

Luckily there there are countries not far away (closer than most US states to Colorado) that provide some serious mountains. Imagine living in a large (fictional) cultural and tech hub in the plains 100 miles east of Boulder. That's what Amsterdam may be like in this regard (distances are off, but infrastructure looks much denser in the Netherlands and its neighbors).

The mountain side is still more distant than in Boulder, but "different country" means a different thing in Europe.

Re: Landlords are trying not to rent to startups in San Francisco

#268

Post by klipt »

dataker wrote: post #39

While in SV, I couldn't understand the hate towards East Bay: it's fairly priced, close to the 'hub' and not as violent as otherwise portrayed. Could anyone elaborate?

East Bay rents went up ~30% in the last year. So people are moving there, and so the wave of gentrification spreads outwards...

Re: Landlords are trying not to rent to startups in San Francisco

#269

Post by Mikushi »

austenallred wrote: post #188
Mikushi wrote: post #187

Earlier quoted context omitted.

>The entire point of a startup is to not stay its current size Growth for the sake of growth? I would actually think that this is pretty far away from what startups are about.

"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth." - pg

Well, that's his view on it. I and many others would disagree fundamentally on those points.

Re: Landlords are trying not to rent to startups in San Francisco

#270

Post by lil_cain »

nostrademons wrote: post #55
ffreire wrote: post #36

Earlier quoted context omitted.

Your response coupled with your username gave me a shiver, heh. That said, why would the Fed tighten money in the fall when we're so close to an election year? I know they hold longer terms to hopefully avoid political swings, but, it just seems like bad timing.

Well, if the Fed doesn't tighten, they're at a pretty high risk of introducing serious inflation into the economy. The high commercial rents are a form of inflation; so are the wages of tech workers, and people being priced out of the Bay Area. So far, this is local to a few industries and metropolitan areas, but if the Fed doesn't act you could see it start showing up in nationwide statistics. That said, I'm not ent…

nor was Nostradamus'
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