That's the average annual cost of renting a small commercial office space in Shoreditch.
It's a number that understandably has many tech startup founders seriously considering moving teams into coworking spaces in lieu of traditional office setups.
Factor in the additional headaches of having to sign a multi-year lease, acquire office furniture, and shell out additional funds to keep the lights on, and the choice begins to look obvious.
Achieving rapid growth within a limited time frame, and on limited funds, is part of the startup game. Those who play it well make wise spending decisions to preserve resources and maximize their chance of success.
As crazy as it sounds, successful startup founders know that getting the initial funding is "the easy part." Excessive burn rate, on the other hand? That's the kind of thing of thing that drives startups into the ground.
With that said, there seems to be a surprising lack of concern among tech founders, in regards to protecting cash flow. According to the 2016 State of Startups Report, only 24 percent of founders surveyed feared running out of cash — despite the fact that the majority were burning through it at a rapid rate.
Regardless of whether or not controlling burn rate is a top concern for you personally, coworking is still an exceptionally effective way to work in the heart of London at an affordable rate. For the remainder of this article, we'll outline five factors to consider when looking for your next space.
5 Coworking Factors That Every London Startup Should Consider
1. Budget + Needs
London coworking costs are generally divided into three categories: Hot desks (£450 a month on average), dedicated desks (£700 a month on average) and private offices (varies significantly, from £1,200 to £7,000+ a month on average).
That means you could pay around £2,250 for a hot desking team of five. Keep in mind, these numbers are just ballpark figures to provide a general cost assessment. Not only do coworking spaces offer low monthly prices, but they also give members the freedom of being able to add or subtract desk space. Though there are always exceptions, month-to-month contracts are usually standard.
With that said, many overly-crowded coworking spaces do not have the space to quickly accommodate organizational changes (e.g. you secured a new round of funding and need a private office next month). Always ask how easily a space can be adjusted to accommodate requests to upsize or downsize on short notice.
Here are some additional factors that typically affect coworking costs:
- Location: City, neighborhood, and associated rental costs
- Space: The quality, security, and physical environment
- Amenities: Parking, concierge service, and other amenities
- Security: 24/7 access and on-site security staff
Obviously, pricing can vary significantly depending on the size of the team, the budget of the startup, and the exclusivity of the coworking organization. A good starting point? Determine your maximum budget, and decide which factors are essentially non-negotiable to your startup's success before moving forward.
As a tech founder, your non-negotiables may include tech-centric networking events, corporate partnership programs, and introductions to potential mentors, advisors, and VCs. On a personal level, your needs may include nearby bars & restaurants for wining and dining clients; onsite showers for cleaning up after commutes via bike-ride; and tons of natural light for a mood-lifting effect.
When was the last time you worked from 9 to 5?
If your foray into entrepreneurship began immediately after graduation, the answer is probably never! Working anywhere from 60 to 70 hours a week is typical of most startup founders and entrepreneurs.
Which is why finding a coworking space that honors unconventional work schedules is imperative. While many facilities are open 24-hours a day, open-access isn't always included within every membership level. Some spaces may include open-access within their memberships, some may offer it for an additional fee, and some may not provide it at all. An added bonus of staying past 5 p.m.? You will avoid the crowds and experience a faster commute home!
3. Free Trial
Does the coworking space offer a free trial? If not, you have to ask yourself why. If someone is confident in their ability to provide a productive and enjoyable work environment, wouldn't they encourage trying before buying?
As Jeremy Neuner, CEO of NextSpace, told Fast Company: “Given the fact that different people show up to different spaces means every space has its own personality,”
Some are more lively, while others are more focused. Some coworking spaces feel more creatively inspiring, while others feel corporate. Finding your perfect environmental match is important to ensuring a high level of long-term coworking satisfaction
While you may be able to initially overlook small annoyances like a coworker loudly calling his mother each day at 3 p.m., or an onsite manager who doesn't notice when the printer is out of paper, those small inconveniences can significantly affect work satisfaction and productivity over time. Additionally, you'll want to ensure the community itself is conducive to the activities that most matter the to startup growth: Recruiting top talent, connecting with VCs, and further developing entrepreneurial skill sets.
4. The Community + Events
One of the primary advantages of a coworking membership are the array of exclusive community events available for networking and professional growth. Most London coworking spaces maintain some kind of event calendar, but the types of events held vary widely.
Thanks to coworking's surging popularity, London has welcomed 135 different coworking spaces since the early 2000s. There is a different space for every vertical you can think of, from all-encompassing spaces for freelancers to spaces designed exclusively for women to spaces catering specifically to creatives.
As a tech founder, you may want to prioritize spaces that exclusively provide resources, events, and workspace for tech startups. At RocketSpace's London tech campus, we host monthly roundtables centered around the topics that matter most to founders (i.e. pitching VCs, developing product-market fit, improving customer acquisition rates). Additionally, because everyone working here is a tech startup with Seed to Series-C funding, there is almost always someone nearby to help brainstorm solutions to common startup problems that arise.
Another benefit of choosing a tech-centric coworking space? Mentorship is usually baked into the business model in the form of open office hours with successful entrepreneurs and/or special events. Studies show founders who are mentored are twice as likely to succeed as those who are not. The best coworking spaces are aware of the statistic and thus, prioritize introducing members to potential mentors, VCs, corporate partners and clients whenever possible.
5. Amenities and Extras
When evaluating coworking amenities you will find everything from discounted gym memberships to dry cleaning concierges to on-site cafes. The key is knowing which amenities will help you effectively meet your professional goals.
While "Yoga + Hummus Fridays" may sound great, it won't make up for a slow internet connection, a lack of available conference rooms, or limited printing privileges!
The best coworking spaces for tech startups provide:
- Postal distribution + reception services.
- Introductions to VCs + corporate partners.
- Ergonomic workspaces conducive to productivity.
- Ample privacy enclaves + phone booths for virtual meetings.
- Plenty of available meeting rooms (that don't need to be reserved far in advance).
With that said, some preferred amenities are highly personal. Ride a bike to work? You may find both a bike-rack and on-site shower a must-have!
Choose Your Best Fit
The bottom-line: As a tech entrepreneur, your top priority should always be scaling fast.
The coworking space you ultimately choose should embrace your goal as their own. RocketSpace's new tech campus, located at Angel Tube station, provides tech startup founders (with minimum viable products in place) with flexible workspaces, monthly Trend Talks, weekly workshops, and a supportive community of techies who "just get it."
New to the London tech scene? We've compiled the best events, meetups, coworking spaces, and more into the The London Startup Guide. Get your copy: